Weak inflation means rates will remain low for longer

Inflation across Emerging Asia remains very low, with consumer prices rising by less than 2% y/y in seven of the 14 countries we track. Two of those, Thailand and Singapore, are in deflation, while there are only two countries, India and Bangladesh, where inflation is above 5%. The most recent falls in global oil prices will put renewed downward pressure on prices. And with underlying price pressures still weak, inflation is likely to remain below or within the target range of all of the region’s main central banks this year. With growth set to remain relatively subdued, policymakers will look to keep monetary policy supportive. We expect most central banks will keep policy rates on hold at their current low levels throughout 2016.