TAIPEI, July 31 (Reuters) - Taiwan's central bank cautioned that U.S. tariffs are clouding the economic outlook for the second half of 2025, despite easing inflation, and called for more flexibility in monetary policy, minutes from the latest board meeting showed on Thursday.
"Domestic inflation has continued easing and the economic conditions remain stable, heightened uncertainty in the international economic and trade environment may weigh on Taiwan's economic growth" in the second half, several board members said.
In a widely expected move in June, the central bank left the benchmark discount rate (TWINTR=ECI), unchanged at 2%, a level it has maintained since March 2024. The central bank said inflation was expected to gradually decline for the remainder of the year, but its overall monetary policy stance remained hawkish.
One board member, who was not identified in the minutes of the June meeting, said that retaining policy flexibility would enable timely adjustments if needed.
Another board member said that despite the Israel-Iran conflict, the Taiwan dollar appreciation against the U.S. dollar in recent months had helped dampen import prices, which would likely further reduce inflationary pressures.
Taiwan's inflation rate - 1.37% in June and its slowest pace in 51 months - has been much milder than that of economies in Europe and the United States, and its benchmark interest rate has also been correspondingly lower.
The central bank - which has 14 members on its board - holds its next quarterly rate-setting meeting on September 19.
Reporting by Faith Hung; Editing by Jacqueline Wong
