Taiwanese headline inflation likely accelerated in August, central bank to keep rate on hold in September

Taiwanese inflation data for the month of August is set to release tomorrow. According to a DBS Bank research report, the headline inflation is likely to have accelerated to 0.7 percent year-on-year from July’s 0.4 percent.

Vegetable and other fresh food prices are expected to have been stimulated temporarily by typhoons. However, the underlying price pressures are expected to have stayed benign, in the context of lukewarm consumption demand and steady labor market conditions.

“Given the stable inflation outlook and relatively resilient economic growth (thanks to investment repatriation as a result of the China-US trade war), Taiwan’s central bank is not facing serious pressure to ease monetary policy like some of its regional peers. We expect the benchmark discount rate to be kept unchanged at 1.375 percent at September’s policy meeting”, added DBS Bank.