TAIPEI, Jan 29 (Reuters) – Taiwan’s central bank board members were confident in the island’s economic growth but some raised concerns about an AI bubble and risks related to the booming stock market, minutes from the latest board meeting showed on Thursday.
In a widely expected move in December and in a unanimous decision, the central bank left the benchmark discount rate unchanged at 2%, a level it has maintained since March 2024.
It also raised its economic growth forecast for 2025, due to booming exports of tech goods to the United States. Taiwan makes most of the advanced semiconductors powering the AI revolution, which helped its benchmark stock index gain 26% in 2025.
Several board members said there would be solid economic growth into 2026 thanks to sustained AI demand.
But one board member, who like all the others was not identified by name in the minutes of last month’s meeting, said that despite the low probability of an AI bubble, “ongoing monitoring is warranted”.
Another board member said Taiwan’s stock market’s capitalisation has been rising, along with significant growth in Exchange-Traded Funds assets.
“Coupled with the frequent foreign capital flows, these developments could exacerbate volatility in domestic financial and foreign exchange markets and thus warrant close attention,” it cited the board member as saying.
A third board member pointed to the continued rise in foreign institutional investors’ stock holdings in Taiwan.
Even a partial selloff by these foreign investors could intensify downward pressure on the Taiwan dollar exchange rate, the member said.
The central bank, which has 15 members on its board, has a mandate to keep a stable exchange rate.
It holds its next quarterly rate-setting meeting in March.
The government will release its preliminary reading of fourth quarter and full year 2025 economic growth on Friday.
(Reporting by Ben Blanchard, Editing by Alexandra Hudson)
