Taipei: Taiwan's consumer price index (CPI) is projected to increase by 1.9 percent in 2026 if international crude oil prices reach an average of US$100 per barrel amid the ongoing conflict in the Middle East, Central Bank Governor Yang Chin-long announced on Monday.
According to Focus Taiwan, Yang addressed the issue during a hearing of the Legislature's financial committee, where he noted that any spike in crude oil prices to between US$95 and US$115 per barrel is expected to be temporary. On Monday, Brent crude oil prices, which serve as a global benchmark, surged over 3.2 percent at one point, exceeding US$116 per barrel. This increase followed Iran-backed Houthis launching missiles at Israel from Yemen the previous day.
Yang cited the central bank's preliminary estimates, suggesting that if international crude oil prices average US$100 per barrel, Taiwan's CPI would rise by 1.9 percent. This figure is slightly higher than the central bank's recent estimate of 1.8 percent but remains below the bank's 2 percent alert level. Previously, during a quarterly policymaking meeting on March 19, the central bank had updated its CPI projection to 1.8 percent from an earlier prediction of 1.63 percent in December, based on a forecast of US$85 per barrel for global crude oil prices in 2026.
On Monday, Yang stated that the forecasted average price of US$85 per barrel for 2026 aligns with estimates from several research institutions worldwide. He also addressed the possibility of the central bank raising interest rates to counter inflationary pressures, stating that if inflation becomes a concern in Taiwan, the bank would consider tightening its monetary policy, potentially leading to higher interest rates.
Yang emphasized that the central bank would continue to monitor global developments and adjust its inflation estimates accordingly. During its March 19 meeting, the bank opted to keep its key interest rates unchanged for the eighth consecutive quarter, maintaining the discount rate at 2 percent, the highest level in 15 years.
Additionally, the central bank raised its forecast for Taiwan's gross domestic product (GDP) growth to 7.28 percent from 3.67 percent, attributing the increase to robust exports and private investments. Yang expressed cautious optimism about Taiwan's domestic economy, despite the ongoing Middle East conflict. He noted that if the military actions conclude soon, Taiwan stands to benefit from substantial investments by global cloud service providers amid the AI boom.
The central bank plans to gather more data for a more precise forecast during its next policymaking meeting in June.