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Investing.com -- Taiwan’s central bank (CBC) kept its main policy rate unchanged at 2.0% on Thursday. The decision was unanimous and aligned with market expectations, with 27 out of 28 economists in a Bloomberg poll correctly predicting the hold.
The CBC revised its inflation forecast downward during the announcement and indicated the economy would grow "moderately." The central bank also expressed reduced concern about rising house prices, signaling a potentially more dovish stance on monetary policy.
Taiwan’s economy showed strong performance in the first quarter, driven primarily by surging exports of AI-related hardware and importers front-running tariffs. The central bank currently forecasts 3.1% economic growth for the year, significantly lower than some external projections.
Capital Economics maintains a more optimistic outlook, predicting 5.2% growth for Taiwan in 2024. The research firm believes AI-fueled growth will continue and should offset any drag from tariffs, making rate cuts unlikely this year despite the central bank’s dovish signals.
The research firm also points to domestic demand as a potential growth driver, citing the jump in real wage growth and strong investment as firms expand capacity to meet rising demand for AI hardware.
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