Inflation across Asia continued to slow in June and is likely to fall further over the coming months. The key risk to the outlook is the weather – El Niño conditions have arrived in the Pacific and according to forecasters are set to build throughout the rest of 2023. A severe and lengthy El Niño could put significant upward pressure on agricultural prices over the coming months. This poses a risk to our forecast that more central banks will start cutting interest rates later this year.
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