In a significant move, Taiwan’s central bank has decided to maintain its benchmark discount rate at 2% during its quarterly meeting, aligning with market expectations. The decision, made unanimously, reflects the bank’s cautious optimism about the island’s economic trajectory. Governor Yang Chin-long highlighted the unique nature of this year’s economic growth, driven largely by booming exports, particularly in the semiconductor sector, which has been pivotal in powering the global AI boom. Companies like Nvidia have benefited immensely from Taiwan’s advanced chip production, bolstering the local economy. However, Yang expressed concerns over the potential adverse effects of U.S. tariffs, which could necessitate adjustments in monetary policy. The central bank has revised its 2025 economic growth forecast upward to 4.55%, up from 3.05% in June, but anticipates a slowdown to 2.68% in the following year. Additionally, the bank has trimmed its consumer price index forecast for this year to 1.75%, with inflation expected to ease further to 1.66% next year. The bank remains vigilant, closely monitoring developments in U.S. tariffs and geopolitical risks, which could significantly impact Taiwan’s competitive edge. This rate decision follows the U.S. Federal Reserve’s recent rate cut, the first since December, amid concerns over rising unemployment.