Central Bank Raises Economic Growth Forecast to 9.45%, Warns of Credit Risk from Stock Market Boom

TAIPEI, June 18 (CNA) The Central Bank held its second quarterly board meeting today, deciding to keep interest rates unchanged for the ninth consecutive time. The bank expressed optimism about the economic outlook, raising its 2026 economic growth rate forecast to 9.45% and the full-year consumer price index (CPI) inflation forecast to 1.91%. Notably, the Central Bank pointed out that with the booming stock market, individuals are increasing their borrowing for investment activities, and banks need to pay attention to related credit expansion and risk control.

The Central Bank held its second quarterly board meeting today. Considering the moderate inflation outlook and the expectation of steady domestic economic growth momentum, it decided to keep policy interest rates unchanged. The rediscount rate, the rate on accommodations against collateral, and the short-term accommodation rate remain at 2%, 2.375%, and 4.25% annually, respectively.

The Central Bank's March economic forecast estimated this year's economic growth rate at 7.28% and the CPI annual increase at 1.80%. Due to stronger-than-expected AI demand, the Central Bank significantly raised its full-year economic growth rate forecast to 9.45% today. Regarding prices, although major international organizations have revised their international oil price forecasts upward, import prices continue to rise, and service sector inflation is trending upwards, the government's energy price stabilization mechanism is in operation. The Central Bank has slightly raised its forecasts for Taiwan's CPI and core CPI annual increases to 1.91% and 1.90%, respectively.

Notably, this press release specifically mentioned phenomena related to the booming stock market. The Central Bank pointed out that with the active trading in the stock market, individuals are increasing their borrowing for investment activities. Since the beginning of the year, loans for personal financial management revolving funds and investments in private securities, futures, and financial auxiliary industries by all banks have shown significant growth. Banks should pay attention to related credit expansion and risk control.

The Central Bank stated that while short- and long-term market interest rates have risen in recent months, domestic market liquidity remains ample. From January to May this year, the daily average growth rates of the M2 money supply and loans and investments by all banks were 6.12% and 7.94%, respectively, both higher than the annual averages of 4.54% and 6.66% for the full year of last year. (Editor: Pan Yi-ching) 0618

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