Pakistan and Sri Lanka are the two central banks in Asia most likely to raise rates if energy prices remain elevated for a prolonged period. In contrast, Taiwan and Korea will be in little hurry to hike, while Thailand could still loosen policy given how weak the economy is. The Philippines lies somewhere in between; while the easing cycle is now at an end, a sharp fall in the currency would be needed to prompt a rate hike. Meanwhile, Indonesia came into the crisis with inflation already above target, leaving no room for complacency, but political pressure means hikes there are less likely.
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