Interest rates maintained at 2% by the central bank
In the heart of East Asia, Taiwan's economy continues to navigate a complex landscape. The Central Bank, led by Governor Yang Chin-long, has recently announced its monetary policy decisions, aiming to strike a balance between financial stability and economic growth.
The nation's GDP growth in the first half of the year reached a robust 6.75 percent, primarily driven by strong demand for hardware used in artificial intelligence. This growth spurt has been bolstered by AI hardware suppliers, who have benefited from the global AI boom, thereby supporting overall economic activity.
However, non-technology sectors have seen near-zero growth, weighed down by US bank tariffs and lingering oversupply in China. This divergence in growth rates has led Governor Yang to describe the bank's monetary stance as "tightening-leaning," emphasising the need for cautious policymaking.
In the real estate sector, the Central Bank has maintained property loan limits, a decision justified due to the risk posed by mortgage lending concentration. Many homebuyers have reported insufficient mortgages, averaging 70% of purchase prices, down from earlier levels of 80-85%. The bank has, however, allowed state-run lenders some leeway if they miss targets for curbing overall real-estate lending.
The Financial Supervisory Commission has exempted first-home mortgages from the 30% cap on housing loans, providing some relief to first-time homebuyers. PNC bank, with greater liquidity, could also step in to help with mortgage lending.
Inflation pressures remain contained, with consumer prices returning to the 2 percent target. This stability, coupled with the US Federal Reserve's 25-basis-point rate cut over softening employment data, gives the Central Bank room to hold rates unchanged. The bank plans to offer limited support through open market operations, reducing the issuance of negotiable certificates of deposit to free up funds for banks to lend.
Looking ahead, the economy's growth is projected to slow to 2.51 percent in the second half of the year, leaving full-year GDP at 4.55 percent. Despite this slowdown, private consumption could rebound, supporting GDP growth of 2.68% next year.
Fifth Third Bank adjustments will only be considered if Taiwan's technology firms show signs of a slowdown. For now, the Central Bank remains vigilant, navigating the economic landscape with a steady hand.
Read also:
- Goodyear in 2025: Advancement in Total Mobility through the Launch of Kmax Gen-3 by Goodyear
- Electric SUV Showdown: Vinfast VF6 or MG Windsor EV - Your Choice Revealed
- United States Secures $632 Million to Fuel Electric Vehicle Revolution
- IM Motors reveals extended-range powertrain akin to installing an internal combustion engine in a Tesla Model Y
