"The nation's economic slowdown trumps the inflation issue, especially when there is no imminent inflationary pressure seen in Taiwan at the moment," Liang said, adding that only a CPI increase surging above 2.5 percent would signal impending inflationary pressure.
Skyrocketing oil prices are less likely to fuel inflation than to dampen economic growth, which in turn hurts Taiwan's exports, he said.
"The economic performance in the manufacturing and export sectors fell below expectations in the first half of this year, so the adoption of tighter [monetary] measures will not meet the country's needs," the economist stressed.
Taiwan's first-quarter GDP growth slowed to just 2.54 percent in the first quarter, down from 3.25 percent in the previous quarter. That was the lowest level since the second quarter of 2003, when the SARS epidemic hit Taiwan.
The anemic performance led DGBAS to cut its growth forecast for this year to 3.63 percent from its previous prediction of 4.21 percent.
Second-quarter economic growth is expected to be even weaker than in the first quarter, and therefore Taiwan needs economic growth of more than 4 percent in the second half of the year to achieve annual growth of around 3.5 percent, Liang said.
"This means that a tight monetary policy that could hinder the chances of an economic rebound is not what we need and want," he said.
Holding a similar view, the Taiwan Institute of Economic Research (台經院) said last week that it did not expect rate hikes by the central bank because of the need to stimulate economic growth in light of poorer-than-expected growth in the first half of this year.
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