Cabinet Vows to Keep Full-Year CPI Below 2% to Ease Inflation Pressures

Taiwan has continued to face multiple domestic and international economic challenges in recent years. Among these, the core issues drawing the greatest attention from the general public and legislators are the escalating pressure of inflation and the rising cost of living. In response to the public sensitivity regarding price fluctuations, the Legislative Yuan has conducted intensive and rigorous questioning of the executive branch concerning the current economic situation and the response measures proposed by financial and economic ministries. Under this backdrop of legislative oversight, Premier Zhuo Guo-tai publicly stated before the Legislative Yuan that the Executive Yuan is utilizing various policy tools and cross-ministerial coordination mechanisms to make every effort to keep the annual growth rate of the Consumer Price Index (CPI) below the 2 percent inflation threshold. This aim is to stabilize domestic prices for essential goods and calm public sentiment.

The general questioning and debate on financial and economic issues in the Legislative Yuan highlight the high sensitivity of inflation in current Taiwanese society. With the restructuring of global supply chains, ongoing geopolitical conflicts, and fluctuations in international energy and raw material prices, Taiwan, as an economy highly dependent on imports, inevitably bears the pressure of imported inflation. Legislators have frequently raised concerns regarding basic living expenses, such as food, cooking oil, dining out, rent, and utility bills, demanding that the executive team propose concrete and effective measures to curb inflation. They seek to prevent the inflationary burden from eroding wage growth and causing unbearable impacts on the quality of life of ordinary citizens.

In response to the strong concerns raised by legislators and worries from various sectors of society, Premier Zhuo Guo-tai provided a clear policy declaration during his answers. He emphasized that the government’s determination to stabilize prices remains unwavering. The relevant ministries under the Executive Yuan are continuing to stabilize the market through a multi-pronged approach, including maintaining tax reduction measures on key essential goods, stabilizing oil and electricity price mechanisms, and strengthening inspections to crack down on illegal hoarding and monopolistic collusion. Zhuo admitted that keeping the annual CPI growth rate below 2 percent presents certain challenges, but this remains the unwavering direction and policy goal of the executive team. He expressed hope that active fiscal and administrative interventions would build a protective barrier for the public against soaring prices.

On the other hand, the Central Bank, which oversees the nation’s financial and monetary lifelines, has also drawn significant market attention regarding its stance and monetary policy direction. Central Bank Governor Yang Chin-lung, when facing relevant questioning, further elucidated Taiwan’s inflation situation from a professional perspective of macroeconomics and monetary theory. Yang pointed out that in medium- to long-term monetary policy operations, the Central Bank basically targets keeping the inflation rate around 2 percent, which aligns with the moderate inflation levels generally adopted by central banks in advanced nations. However, he also acknowledged that, considering the rapidly changing international economic environment and adjustments in the domestic industrial structure, it is possible in practical terms for the inflation rate to occasionally exceed 2 percent in the short term over the next one or two years.

Yang further explained that when assessing inflation trends, the Central Bank cannot focus solely on single-month data but must observe the overall trend and changes in core inflation. Although specific factors may cause inflation figures to fluctuate around or slightly exceed the 2 percent mark in the short term, the Central Bank will use timely interest rate decisions and open market operations to ensure that domestic inflation does not evolve into a structural or uncontrolled surge. This monetary policy stance, which balances short-term realities with medium- to long-term goals, demonstrates that the Central Bank is carefully seeking the most appropriate dynamic balance between maintaining price stability and supporting economic growth.

Overall, from Premier Zhuo Guo-tai’s political commitment to keeping the annual CPI below 2 percent, to Central Bank Governor Yang Chin-lung’s explanation of medium- to long-term inflation targets and short-term tolerance margins, it reflects that the Taiwan government is adopting a dual-track strategy of administrative and monetary measures to cope with the complex and changing international trade landscape. How to ensure the continued development of economic momentum while effectively alleviating public anxiety over rising living costs will not only test the governance wisdom and cross-ministerial coordination capabilities of the Zhuo administration but will also serve as a core indicator for the political arena and the general public to evaluate the government’s financial and economic governance performance in the coming period. (Source: CNA)