Further rate cuts likely despite rising inflation

Headline inflation has crept higher in most countries across Emerging Asia over the past few months and looks set to rise sharply over the first half of this year due to a rebound in energy price inflation caused by the recovery in global oil prices. However, with large output gaps set to keep underlying price pressures low, inflation across most of the region should remain comfortably within the target ranges of most central banks. Given the benign outlook for inflation, interest rates look likely to remain low for some time to come. Over the coming year we have non-consensus rate cuts pencilled in for Malaysia, the Philippines, Sri Lanka, India and Indonesia.   Global State of Play, 28^th January, 0800 GMT and 1600 GMT. In the first of our regular briefings of the year, Group Chief Economist Neil Shearing will lead a discussion about the economic impact of vaccination programmes, another US fiscal stimulus package and fresh lockdowns in China.