Following a flurry of interest rate hikes towards the end of last year, policymakers in Emerging Asia have struck a more dovish tone in recent weeks. The central banks of Indonesia, Korea and Malaysia all left interest rates unchanged at their first meeting of the year, and in each case hinted that further hikes are unlikely. The shift in rhetoric supports our view that with inflation falling back and exports slumping, policy easing is likely to come onto the agenda in a few places. We are expecting rate cuts in the Philippines and Malaysia over the coming months, whereas many analysts are still expecting interest rate hikes. We are also anticipating loosening in India and China.
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