Fri, Dec 19, 2025 page9

• Central bank maintains rates

  STEPPING BACK: Starting next year, the central bank would modestly relax its oversight of property exposure, allowing banks to manage their real-estate lending internally

  • By Crystal Hsu / Staff reporter
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  The central bank yesterday kept its benchmark discount rate at 2 percent for the seventh consecutive quarter and maintained its selective credit controls on the property market, citing low inflation and the need to oversee real-estate lending.

  The decision comes as the economy posts unexpectedly strong growth, fueled by global demand for artificial intelligence (AI) hardware, which has propelled the technology sector even as traditional industries remain subdued.

  The central bank steeply raised its GDP growth forecast for this year to 7.31 percent, the fastest pace in 15 years, up from earlier estimates of 4.55 percent. It projects 3.67 percent growth for next year, compared with prior estimates of 2.68 percent.

  

  Central bank Governor Yang Chin-long at a news conference in Taipei yesterday stands in front of a board showing the bank’s latest economic growth and trade forecasts.

  Photo: CNA

  “Taiwan’s GDP growth has been widely underestimated by both domestic and international institutions, as global demand for AI hardware has outpaced expectations and is set to continue driving expansion next year,” central bank Governor Yang Chin-long (楊金龍) said following the bank’s policy meeting.

  The unexpected strength in the technology sector has offset slower growth in traditional industries. Yang also noted that potential risks from the ongoing US semiconductor probe have not materialized and warned that any tariffs on chips would ultimately harm the US, which relies on Taiwan’s components to deploy AI technologies.

  Meanwhile, the central bank maintained its selective property lending measures, noting that housing prices showed little change even as transactions slowed and loan-to-value ratios declined.

  Real-estate loans accounted for 36.7 percent of total lending last month, down from 37.61 percent in June last year. Most banks have met the central bank’s lending targets and property loan indicators have stabilized, Yang said.

  Starting next year, the central bank would modestly relax its oversight of property exposure, allowing banks to manage real-estate lending internally without further reduction measures, he said.

  Financial institutions would be required to submit monthly reports on property loans, while the central bank would conduct targeted inspections to ensure compliance.

  The governor said that some lenders previously categorized property loans as working capital, underscoring the need for continued oversight.

  The measures aim to help channel credit to first-time buyers, government-backed urban renewal and social housing projects, and productive capital investment, he said.

  The government’s preferential lending terms are scheduled to expire in July next year, prompting the Cabinet to plan a revised program aimed at supporting buyers with genuine housing needs.

  Yang said that such programs carry both benefits and risks, cautioning that excessively loose credit could reignite property speculation and threaten the nation’s financial stability.

  He urged lenders to uphold prudent credit assessments, saying that the cost of curbing previous housing market overheating had been “high.”
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