(Bloomberg) -- Taiwan held its key interest rate as it considers the potential of President-elect Donald Trump to disrupt trade vital to the archipelago and with rising property prices.
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During a quarterly meeting on Thursday, the monetary authority left its benchmark rate at 2%. All 25 of the economists surveyed by Bloomberg predicted a hold by the Central Bank of the Republic of China, as the institution in Taipei is formally known.
The decision to maintain the benchmark rate at the highest since 2008 while many other economies in Asia cut along with the US shows Taiwan remains focused on reining in the property market while also preparing for the return to office of Trump. The president-elect has threatened to slap more tariffs on the world’s No. 2 economy, a move that would cause complications for Taiwan’s exporters given the US and China are the archipelago’s biggest trade partners.
“We still don’t know when the tariff policy will be implemented and how big it will be,” Taiwan central bank Governor Yang Chin-long said at a briefing after the rate decision was announced.
“How other countries will retaliate is very uncertain,” he said, in an apparent reference to China.
Also Thursday, the monetary authority in Taipei kept its inflation forecast for next year at 1.89%, while lifting its growth forecast to 3.13%, from 3.08%.
Yang hinted at the uncertain outlook for Taiwan by saying the corresponding forecasts the central bank made in March and June of next year “would be more important than this time around because by then we can see a clearer message by the Trump administration.”
While Trump’s return is becoming a priority for policymakers, the Taiwan central bank’s main concern all year has been property. Home prices have risen for 24 straight quarters, and rents climbed in November at the fastest pace in 28 years.
It raised the amount of funds banks must hold in reserve at its last two quarterly meetings, while also rolling out property curbs. Those moves may be having an effect considering the number of transactions in Taiwan’s major cities has dropped recently.
The monetary authority signaled its lingering concern with the real estate sector in a statement accompanying the rate decision, saying it would keep reviewing plans by banks to improve their mortgage situations. In August, the CBC said it met with 34 local lenders and come up with ways to cool their property lending.
Taiwan has had room to target the property sector because inflation has stayed around the government’s 2% comfort level and the economy has been supported by robust global demand for its high-tech products, which are pivotal to the artificial intelligence boom.