Taiwan CPI inflation likely to remain around 0.5 pct y/y till end-2017, says ANZ Research

Taiwan’s consumer-price led inflation index (CPI) is expected to remain around 0.5 percent y/y till end-2017. An expected pay rise in civil servant and corporate salaries could further, provide a mild boost to CPI in 2018, ANZ Research reported.

Currently, the country’s CPI remains stubbornly low with a strong domestic currency suppressing import prices. August’s CPI rose by 0.96 percent y/y. CPI has risen by an average of just 0.5 percent since February 2017. With growth picking up only gradually, inflation is expected to remain benign in Q4 2017.

In the absence of a strong labor market recovery, wage growth is also unlikely to provide much impetus. The CBC kept the policy rate unchanged at 1.375 percent at its September meeting. It has been more than a year (June 2016) since the central bank made a cut.

"The decision is consistent with our view that the policymakers have switched to a wait-and-see mode and will only act if there is a massive change in the global financial situation. We expect the CBC to stay on hold over the next 12 months," the report said.

Meanwhile, FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest