Taiwan: Mild tightening path in 2H – DBS

FXStreet Insights Team FXStreet

DBS Group Research economist Ma Tieying revises Taiwan’s policy rate outlook after upgrading 2026 Gross Domestic Product (GDP) and Consumer Price Index (CPI) forecasts. The team now expects an additional 12.5 bps hike in 3Q, taking the policy discount rate to 2.125%. Tieying sees the central bank on hold in June, with rising Producer Price Index (PPI) and Purchasing Managers' Index (PMI) price indices pointing to stronger inflation pressures later in 2026.

DBS adds 3Q rate hike for Taiwan

"Following our earlier upward revision of 2026 GDP and CPI forecasts (to 9.4% and 1.9%, respectively), we also revise our interest rate forecast, adding one 12.5bps rate hike in 3Q, which would lift the policy discount rate from 2.00% to 2.125%. Recent data suggest that the central bank is likely to remain on hold at the June policy meeting."

"Looking ahead, however, tightening pressure is likely to build in 2H as pipeline inflation pressures continue to rise."

"These leading indicators suggest that headline CPI could rise above 2% from May onward and reach around 2.5% by mid-year."

"Some pass-through into core inflation is also likely, potentially pushing core CPI toward 2.5% in 2H."

"Taiwan’s central bank remains vigilant against second-round inflation effects stemming from higher energy costs."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD bulls regain control above 0.6950 amid USD retreat

AUD/USD regains traction and extends the previous day's bounce from the weekly low, aiming for 0.7000 in Asia on Friday. The overnight pullback in US bond yields keeps the US Dollar below an 18-month high, which in turn offers some support to the pair. Meanwhile, hawkish RBA expectations also keep the major underpinned.

USD/JPY holds gains near 158.00 after Japan's weak Household Spending data

USD/JPY clings to gains around 158.00 after data showed on Friday that Japan's Household Spending fell for the ninth straight month, undermining the Japanese Yen. Meanwhile, the US Dollar remains depressed as the overnight fall in US bond yields counters a hawkish Fed and geopolitical uncertainties, could cap any downside in the pair.

Gold remains range-bound below $4,200

Gold has given up some ground after an initial bullish attempt to reach weekly highs, returning to below the $4,200 mark per troy ounce on Friday. The US Dollar’s strong upside momentum, combined with rising US Treasury yields across the curve, seems to keep further gains in the yellow metal under scrutiny.

Has Bitcoin really escaped the macro forces it was built to fight?

Over 17 years ago, Satoshi Nakamoto designed Bitcoin (BTC) on the back of a global financial crisis as an alternative to the global monetary system outside the control of central banks, governments and traditional intermediaries. This raises a key question: has Bitcoin really become independent of the macroeconomic forces it was built to challenge?

The Euro is not the sick man of Europe. France's bond market is

EUR/USD remains under pressure, near the 17-month low of 1.1161 reached on Monday. The pair has lost more than 7% since its yearly peak, as concerns over France's public finances increasingly weigh on the single currency. But behind the weakness of the Euro (EUR), the problem does not necessarily lie with the European economy as a whole.