Taiwan Central Bank Holds Rates for Fifth Straight Quarter Amid Global Trade Uncertainty

As global central banks hit pause, Taiwan’s monetary policymakers stay the course, balancing trade risks and inflation concerns.

Arpit Thakur June 19, 2025Last Updated: June 19, 2025

45,916 2 minutes read

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Reviewed & Published by HH Business Desk

Taipei, June 19: Taiwan’s central bank left interest rates unchanged on Thursday, keeping its benchmark discount rate at 2% for the fifth consecutive quarter. The move, widely expected, signals continued caution amid a murky global trade outlook and persistent inflation risks.

Rates on accommodations with collateral remain at 2.375%, while those without collateral stay at 4.25%, according to Focus Taiwan. These are still the highest levels since the global financial crisis, and there’s little indication of an imminent pivot.

The Central Bank of the Republic of China (Taiwan) is following the lead of other major economies, including the U.S. and UAE. On Wednesday, the Federal Reserve opted to hold its policy rate steady for a fourth straight meeting. Everyone’s playing defense right now—rates are holding because the risks of moving are higher than the risks of standing still.

Trade Risk Is the Real Wildcard

While Taiwan’s inflation is relatively stable, the real variable is trade. Former U.S. President Donald Trump has reintroduced tariff threats into the conversation, and for Taiwan—an export-driven economy—that’s no small concern.

Back in April, Trump proposed a 32% import tariff on Taiwanese goods. A week later, he announced a 90-day pause to allow time for negotiation, but that hasn’t eliminated the threat. He’s also floated targeting semiconductors—Taiwan’s most critical export sector. That would hit not just Taiwan, but global supply chains in tech, automotive, and defense.

For the central bank, the threat isn’t theoretical. It’s a concrete external shock that could rattle the island’s economic base if it materializes.

No Room for a Misstep

The challenge here is balance. Cut rates too early and risk inflaming prices, especially if tariffs go live. Tighten further and you might choke off already weakening external demand. The bank’s choice to stay put reflects a preference for stability over short-term stimulus.

To be clear, this is less about internal fundamentals and more about preparing for external volatility. Taiwan can’t afford a misread on policy timing—not when its economy is as globally wired as it is.

What to Watch Next

With the Fed’s trajectory unclear, and trade rhetoric heating up as U.S. elections approach, Taiwan’s central bank will remain in wait-and-watch mode. The next few months will hinge on two things: whether Trump’s tariffs move from proposal to policy, and how resilient global demand proves over the second half of the year.

For now, standing still is the smartest move they can make. But it won’t be a long-term position. If external shocks escalate, Taiwan will need to move—fast and decisively.

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Author Profile

Arpit Thakur

Reporting Fellow at Hindustan Herald

Arpit Thakur is a Reporting Fellow at Hindustan Herald, dedicated to covering the dynamic world of business and finance. A student at Amity University, Noida, Arpit leverages his academic insights to provide daily, well-researched analyses of market trends, corporate developments, and economic policies. He is committed to delivering clear and impactful financial news to our readers.