The Central Bank held its second quarter board meeting on the 19th, attracting high market attention regarding the latest monetary policy developments. This meeting focused on three major topics: geopolitical risks pushing inflation, exchange rate fluctuations, and international political and economic situations.

Senior financial executives indicated that the Sovereign Fund, led by President Lai, and the competition between the U.S. and China in stablecoins are two new challenges the Central Bank must confront. As the U.S. Federal Reserve announced its interest rate decision, the Central Bank held its meeting seamlessly afterward, indicating that the future direction of monetary policy will depend on observing the Fed’s movements.

Market sentiment generally suggests that interest rates are unlikely to change, with the rediscount rate remaining at 2% for five consecutive quarters. Additionally, there are concerns over the uncertainty of Trump’s policies, marking this meeting as one of the greatest challenges for the Central Bank in recent years, with five key issues requiring solutions:

• Geopolitical risks affecting inflation, particularly the recent intensification of the Iran conflict and the ongoing Russia-Ukraine war, pushing oil prices higher.
• Trump's policies creating uncertainties in trade negotiations, posing significant challenges for Taiwan's economic growth in the second half of the year.
• Recent pressures on the New Taiwan Dollar exchange rate due to a strong export performance, raising questions about the Central Bank's autonomy.
• The President's push for the establishment of a Sovereign Fund, which the Central Bank supports but emphasizes not leading.
• The emergence of stablecoins, with the U.S. taking steps toward legalization and Hong Kong being proactive, reflecting intensified competition between traditional finance and virtual finance.

These discussions will have a direct impact on Taiwan’s monetary policy and future direction.