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Taiwan's central bank kept its policy rate unchanged at 2.00% at the June 18 meeting, while maintaining a slightly hawkish bias. The CBC raised its 2026 GDP growth forecast to 9.45% (from 7.28%) and increased its CPI inflation forecast to 1.91% (from 1.80%). Governor Yang disclosed that 2 of the 15 board members voted for a rate hike at this meeting. However, he emphasized that pressure for a rate hike is not imminent, as inflation remains around 2%.
The CBC also left its LTV restrictions on housing mortgage loans unchanged. The central bank noted that property transactions have cooled, house price appreciation has moderated, and banks' concentration in real estate lending has improved following the credit control measures introduced since August 2024. The CBC also reminded banks to strengthen risk management amid the expansion of stock market-related credit.
We continue to forecast a 12.5bp rate hike in 2H, but shift the expected timing to 4Q from 3Q. The CBC appears comfortable with inflation around 2% and real interest rates near zero at present. We also expect existing property-sector credit controls to remain in place. 
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