Emerging Asia Economics

Emerging Asia Chart Book
06 May, 2008

Asia – High inflation derails central bank plans (May 08)

Inflation has re-emerged as a unifying theme across many Asian economies in
recent weeks. Driven by the continuing high international oil and food prices,
persistent upside surprises to inflation have forced a rethinking of monetary
policy in the region. Meanwhile, early data indicate that domestic demand held
up surprisingly well in the first quarter, clearing the way for central banks to
focus on the inflation threat. Indonesia has embarked on a modest tightening
cycle, beginning with a 25bp hike announced on 6th May. The Philippines could
be next to follow. Finally, the central banks in Malaysia and Thailand are also
now emphasising inflation risks, suggesting that rates there will remain on hold
for longer than we initially expected....

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