Yang Chin-long: CPI Above 2% in the Short Term Is Not a Problem; Central Bank Forecasts It Will Fall to 1.83% in 2027

Central Bank Governor Yang Chin-long appeared before the Legislative Yuan's Finance Committee on October 28, 2026 to deliver a business report and take questions. Several legislators focused on inflation and on whether the central bank is considering a rate hike. Taiwan's consumer price index (CPI) annual growth rate has stayed above the 2% inflation alert line for 5 consecutive months. During questioning, Legislator Yen Kuan-heng noted that CPI annual growth in September 2026 was 2.73%, yet the policy rate has not moved. Yang responded, "This 2.73 is only one month."

Yang said CPI annual growth was 1.97% in 2021 and rose to 2.95% in 2022. The central bank began a rate-hike cycle in 2022 and raised the reserve requirement ratio, and it raised rates by a half notch again in March 2024. He said that when CPI grew 2.95% in 2022 the central bank had to raise rates, but it did not say it had to wait until 2.95%; what the central bank cares about is how high inflation will go next year.

Yang said 2% is a reference value, and the central bank has never held that CPI absolutely cannot break through 2%: "A short-term reading above 2% is not a problem." When Legislator Li Kun-cheng pressed on whether 2% is a line of defense, Yang said 2 is "a standard," and that when CPI exceeds 2%, the central bank will find ways to adjust using other policy tools.

From January to September 2026, CPI grew an average of 1.94% year on year. The central bank's written report forecasts 2.03% for full-year 2026 and a decline to 1.83% in 2027. Major domestic and international institutions forecast an average of 2.04% for Taiwan's CPI annual growth in 2026 and an average of 1.89% for 2027. Taking into account the major institutions' expectation that international energy prices will fall back, the central bank considers the price situation still acceptable.

Yang said domestic inflation is currently still manageable; if the energy subsidies from CPC Corporation and Taipower are not continued and international oil prices rise again, the inflation rate could continue to climb. He said that oil price increases are a supply-side factor, that using state subsidies to curb inflation is a relatively good policy, and that using rate hikes to suppress supply-side factors would not work very well. Although the central bank did not raise rates in 2026, it has maintained a relatively tight monetary policy stance, and market interest rates have risen. Yang said whether rates are raised in December will depend on next year's inflation forecast, and the central bank will keep watching until the board of directors and supervisors meeting in December.