TAIPEI (Reuters) -Taiwan’s central bank raised its policy rate on Thursday for the second time this year, reflecting concerns about quickening inflation and following the U.S. Federal Reserve’s largest interest rate increase in more than a quarter of a century.
It also revised down the trade-reliant island’s growth outlook for 2022.
The central bank raised the benchmark discount rate by 12.5 basis points (bps) to 1.5%.
All 19 economists in a Reuters poll had expected the central bank to lift the rate, with 10 predicting a rise to 1.5% and the other nine seeing it going to 1.625%.
The decision follows the Federal Reserve’s largest rate increase in more than a quarter of a century on Wednesday.
Taiwan’s central bank has repeatedly said that it will tighten monetary policy this year, following other major economies, and that it sees inflation as a key criteria for rate moves.
On Thursday, it forecast the consumer price index (CPI) would rise 2.83% in 2022, revising up the outlook from 2.37% predicted in March.
The central bank also cut its 2022 estimate for gross domestic product (GDP) growth to 3.75% from 4.05% seen in March.
Taiwan’s consumer price index was 3.39% higher in May than a year earlier.
That inflation rate was the highest since August 2012 and exceeded the central bank’s 2% target for the 10th month in a row.
(Reporting by Liang-sa Loh, Yimou Lee and Ben Blanchard; Editing by Bradley Perrett and Kim Coghill)
