Taiwan's central bank (CBC) maintained its policy rate unchanged at 2.0% on Thursday, as expected, noted Societe Generale.

Despite the upcoming power tariff hike, Governor Yang struck a somewhat dovish tone, wrote the bank in a note to clients.

According to SocGen, there are broadly three reasons for Thursday's decision: i) inflation should be under control despite upcoming price adjustments in electricity, water and railway tickets; ii) tariff uncertainty; iii) housing, which seems to be easing after several rounds of tightening.

On inflation, the CBC forecasts that the consumer price index will be around the 2% target and core CPI will be marginally lower at 1.9% taking into account the coming price adjustments. When asked about what would prompt the CBC to consider a rate hike, Yang also mentioned that monetary policy isn't the best tool to deal with supply-side factors -- this is a stark change compared with last year when the CBC "pre-emptively" raised rates in anticipation of the power price increases.

That also shows the CBC's preference for no further tightening, stated the bank.

While it's fair that the CBC should be mindful of downside risks coming from tariffs, Yang also mentioned that tariffs on Taiwan may not have a big impact on the economy as some have anticipated. One could only find out on April 2 whether Taiwan is one of the targets of United States President Donald Trump's reciprocal tariffs.

That aside, the economy has remained resilient, supported by still healthy tech demand and a tight labor market, added SocGen. So barring major tariffs, it's also not easy for the CBC to consider policy easing, considering that real policy rates in Taiwan now are only around zero.

As a consequence, the bank expects the CBC to hold for the rest of the year.