Energy Prices Push Inflation Expectations; Central Bank to Release CPI Forecast in June

(CNA, Taipei, May 20, by reporter Lu Yen-tzu) International oil prices continue to fluctuate at high levels, affected by the situation in the Middle East. Central Bank Deputy Governor Yen Tzung-ta stated during a legislative interpellation today that there are indeed signs of energy prices pushing up inflation expectations. If international crude oil prices rise in the future, it will naturally affect the possibility of an upward revision to the Consumer Price Index (CPI) forecast, with data to be released in June. The Finance Committee of the Legislative Yuan today invited the Ministry of Finance, the Financial Supervisory Commission, and state-owned banks to present a special report on 'Digital Transformation, Talent Recruitment, Employee Rights, and Medium-to-Long-Term Consolidation Planning of State-Owned Financial Institutions.' KMT Legislator Yen Kuan-heng raised concerns during his questioning, noting that Kevin Warsh is set to take over as Chairman of the U.S. Federal Reserve (Fed), but rising CPI has diminished the market's original expectations for an interest rate cut. He also pointed out that although the Directorate-General of Budget, Accounting and Statistics announced April's CPI annual growth rate was 1.74%, not breaking the 2% mark, the monthly increase was significant. He questioned whether there was concern about domestic inflation expectations if the conflict in the Middle East keeps energy prices high. Yen Tzung-ta explained that current data indeed shows an upward adjustment in inflation expectations internationally due to constrained global oil prices. He stated that the Central Bank had already revised this year's CPI upward to 1.8% in March, on the premise that the average annual price of Brent crude oil remains at US$85 per barrel. If international crude prices rise further, it will naturally impact the likelihood of an upward CPI revision, with the latest data expected to be announced this June. Yen mentioned that the oil price stabilization mechanism does help alleviate the pressure of rising CPI, and its effect will persist if oil prices continue to climb. As for whether the Central Bank would consider the possibility of a 'reverse interest rate hike,' Yen only said that the bank's monetary policy considers many aspects and that it will explain its assessment of domestic and international economic issues, inflation forecasts, and other factors in mid-June this year. (Editor: Yang Kai-hsiang)