Taiwan central bank to apply moderate tightening against inflation

TAIPEI (Reuters) - Taiwan's central bank said on Tuesday it would continue moderate tightening of monetary policy to curb rising inflation expectations after unexpectedly raising its benchmark rate last week.

The central bank hiked the benchmark discount rate TWINTR=ECI to 2% from 1.875%, where it has stood since last March. It cited inflationary pressures and next month's rise in electricity prices, which will go up by an average of 11% but by more for large industrial users.

"We will continue to review the impact of electricity price hikes on inflation," the central bank said in a written report before governor Yang Chin-long takes questions in parliament on Wednesday.

Monetary policy will be adjusted in a timely way and be tightened moderately and gradually, it added.

However, the central bank also noted that Taiwan's inflation was much milder than other major economies, and that its tightening was also much milder.

The central bank said that it expects the consumer price index (CPI) to rise 2.16% and core CPI to rise 2.03% given the electricity price hikes, but that inflation will gradually ease this year.

(Reporting by Faith Hung and Liang-sa Loh; Editing by Ben Blanchard and Philippa Fletcher)

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