Taiwan's central bank raised its key interest rate unexpectedly amid worries about inflation.
At the quarterly meeting, policymakers of the central bank lifted its benchmark rate by 25 basis points to 1.375 percent from 1.125 percent. The interest rate has been at a record low 1.125 percent since March 2020.
The central bank said the global supply chain bottleneck will continue for some time, and the recent military conflict between Russia and Ukraine has caused the prices of crude oil, grains and base metals to rise.
Inflation for the whole year of 2022 is seen at 2.37 percent, up from the previous outlook of 1.59 percent.
Due to the impact of the war in Ukraine, the bank expects economic growth to moderate this year despite a pick-up in private consumption and exports.
The headline inflation rate is set to peak at around 4.0 percent in the second quarter of the year, before dropping back in the second half of the year, Gareth Leather, an economist at Capital Economics, said.
"We doubt today's 25bp rate hike is the start of an aggressive tightening cycle. We are expecting just 25bps more of rate hikes this year," Leather added.
