TAIPEI (Taiwan News) — Central Bank Governor Yang Chin-long (楊金龍) has said Taiwan’s logistics supply lines are very secure and that the country will not experience stagflation, according to a UDN report.

Reporting to the Legislative Yuan's Finance Committee on Monday (Nov. 15), Yang spoke to members of the committee who are concerned about rising inflation both internationally and domestically, including Tseng Ming-tsung (曾銘宗), Lai Shih-pao (賴士葆), and Lin Te-fu (林德福).

Legislator Tseng pointed out that the Consumer Price Index (CPI) in the U.S. rose 6.2% last month — a 30-year high. This came after the CPI had been above 5% for five consecutive months, and the American government has now signaled that reversing the trend is a top priority, as it is starting to hurt families. Tseng then asked if President Yang thought the U.S. Federal Reserve (Fed) would raise interest rates early.

Yang responded by saying that if prices continue to rise in the U.S., the American economy will start to feel the pressure, so an interest rate rise may be moved forward. However, Yang said the Fed thinks inflation will settle down again in the middle or third quarter of 2022.

As for Taiwan, Yang cited data points that show the estimated CPI for this year will not go over 2%. He mentioned that the Bureau of Statistics has revised the overall CPI for the first 10 months of this year to 1.82%.

Based on current market expectations, Yang said the Fed could raise interest rates as soon as June. He feels there is a 50-50 chance of that happening.

As for whether Taiwan would follow suit and adjust its own rates, Yang said that decision would be made by considering three factors. These would be the inflation rate at the time (and the likely future rate), the level of austerity in major global economies, and the overall recovery of the domestic economy.