CBC Releases Minutes From December Monetary Policy Review

The Central Bank of the Republic of China has released the minutes from its December monetary policy meeting, at which it decided to raise the key interest rate by 125bp to 1.750%.

• The CBC took the decision based on the following considerations:
  1. Domestic inflation eased in 2H2023 but could still register above 2% for the year before declining to below 2% the following year.
  2. Export growth moderated significantly and the 2022 growth forecast was revised lower to +2.91% Y/Y, with the 2023 growth forecast downgraded to +2.53% Y/Y.
• "One board director stated that the 0.125 percentage point increase in the policy rates would be appropriate given that the annual CPI growth rate was forecasted to rise above 2% this year before dropping to slightly below 2%."
• "One board director supported the proposed rate hike, citing the interest rate differential as the reason with the Fed and the ECB delivering aggressive and steep rate hikes to fight inflation amid ongoing rate hike cycles."
• "One board director stated support for raising the policy rates by 0.125 percentage points and leaving the RRR unchanged, adding that the move matched market expectation."
• Three policymakers, Nan-Kuang Chen, Shiu-Sheng Chen, and Yi Ting Li, opposed the decision but the communique was approved unanimously.
• Clicked here to see the full document.