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The Central Bank of Sri Lanka (CBSL) kept its policy rates on hold today, as expected. Core inflation is low, but current policy settings are very accommodative while the economy is set for another year of above-trend growth. Accordingly, we still believe …
15th June 2011
The Bank of Korea's decision to raise its policy rate by 25bp to 3.25% on Friday surprised the consensus which had expected no change but was in line with our view. We expect another hike in Q3 and see the base rate reaching 4.0% by mid-2012. However, the …
14th June 2011
Bank Indonesia (BI) kept its reference rate at 6.75% today, as was widely anticipated. The central bank is still relying on rupiah appreciation to ease the blow from higher commodity prices. Nonetheless, core inflation should continue to trend higher as …
9th June 2011
The Reserve Bank of Australia (RBA) held its cash rate at 4.75% today, as expected. The global economy looks to be slowing, but above-trend growth is nonetheless still likely in Australia and there is already little spare capacity in the economy. We …
7th June 2011
Pakistan’s federal budget was announced late last week with the aim to narrow the chronic fiscal deficit. The government is rightly looking to broaden the tax base and scale back subsidies, but improvement on the fiscal side has historically proven …
6th June 2011
We have changed our forecast that Bank Indonesia (BI) will raise its policy rate on Thursday and now believe that the reference rate will be held at 6.75%. This is because headline inflation continues to trend lower, while recent data suggest that global …
Purchasing Managers’ Indices (PMIs) released today for India, Korea, Taiwan, Singapore and Australia all worsened. However, the declines were generally small. These data suggest that manufacturing sectors in the region have so far been resilient to the …
1st June 2011
Today’s Q1 GDP data show that Australia’s economy contracted in early 2011 at its fastest pace since the 1991 recession. However, the weakness was down to local floods and Cyclone Yasi. Growth will inevitably resume in coming quarters. The key point is …
The Bank of Thailand (BoT) hiked its policy rate by 25bp to 3.0% today, as expected. The economy grew at an above-trend pace at the start of the year, while price pressures should continue to mount in coming quarters. We expect another 25bp hike in July, …
GDP numbers released today show that growth in India eased slightly in Q1 2011. We expect it to fall further in the first six months of this financial year, which runs from April 2011 to March 2012, but to recover after that. Meanwhile, inflation is set …
31st May 2011
Q1 GDP for the Philippines, published today, showed that the economy continued to expand despite a significant fall in government spending. The big picture is that domestic demand remains robust despite growing external sector risks. As such, the central …
30th May 2011
Australia’s Q1 GDP data will be released on Wednesday and are likely to show that the economy contracted in early 2011. However, the weakness was mainly down to local floods and Cyclone Yasi. Growth will inevitably resume in coming quarters. The key point …
Q1 GDP data out so far across Asia confirm that most economies have been growing at or above their trend pace. Strong growth has left little spare capacity in many economies and core inflation continues to trend higher. Policy interest rates have moved up …
27th May 2011
April price data show that inflation is highest (and is still rising) in Vietnam while it is lowest in Taiwan. Looking ahead, global commodity prices are likely to put downward pressure on headline inflation later this year. But core inflation, which is …
23rd May 2011
Today’s Q1 GDP data for Thailand show that the economy grew at a faster q/q pace at the start of this year, as expected. Growth in the coming quarters should be supported by strengthening domestic demand and exports to the rest of Asia. The upshot is that …
In a move that was widely anticipated, the State Bank of Pakistan (SBP) left its policy rate unchanged at 14.0% over the weekend. The upcoming FY2011-12 budget and subsequent fiscal developments will be the key area to watch in determining monetary …
Despite 2011 being an election year, New Zealand’s government today announced a budget with few giveaways. The aim to move back into a surplus by 2014-15 will be tough to achieve, especially if initial estimates of the cost of rebuilding Christchurch are …
19th May 2011
Malaysia’s economy grew at a slightly slower pace at the start of the year, which surprised the consensus but was in-line with our view. Strengthening domestic demand should mean that growth picks up during the course of the year. Price pressures are …
18th May 2011
Headline inflation fell slightly in April but is likely to rise again in the coming few months. Meanwhile, indicators of activity suggest economic growth in India is still rapid. The upshot is that we still expect the RBI to raise rates by 25bp in June …
16th May 2011
The Central Bank of Sri Lanka (CBSL) left its interest rates unchanged today, as was widely anticipated. Nonetheless, policy settings were tightened in April and more rate hikes look only a matter of time. … Sri Lanka's central bank biding its …
Policymakers in Vietnam have been busy so far this year tackling the risk of the economy overheating. Nonetheless, policy settings were left too loose for too long and recent data show that broad-based price pressures continue to mount. Accordingly, we …
The Bank of Korea (BoK) unexpectedly held its policy rate at 3.0% today. Nonetheless, GDP growth has picked up to an above-trend pace, while core inflation looks set to climb further. We still believe that more policy tightening is on the way, although …
13th May 2011
Today’s decision by Bank Indonesia (BI) to hold its reference rate steady at 6.75% was anticipated given recent downside surprises in headline inflation. However, core inflation continues to climb while the economy is set to grow at an above-trend pace in …
12th May 2011
Despite recent natural disasters, Australia’s government stuck to its aim of moving back into a surplus by 2012-13 in today’s federal budget. The goal is likely to be achieved given the prospect of restrained public spending and strong GDP growth. …
10th May 2011
We expect Korea’s central bank to raise its base rate by 25bp to 3.25% on Friday. This is also the consensus view. GDP growth was strong at the start of the year while core inflation, which excludes food and fuel, is high and looks set to climb further. …
9th May 2011
Today’s 25bp policy rate hike by Bank Negara Malaysia (BNM) surprised the consensus, which expected no change, but was in line with our forecast. We expect further tightening to 3.5% by the end of the year. … Bank Negara Malaysia set to tighten …
5th May 2011
The Philippines’ central bank (BSP) raised its policy rate by 25bp to 4.5% today, as expected. Core inflation has been trending upwards and is likely to continue doing so, while economic growth looks set to remain brisk. The upshot is that we are sticking …
Today’s Q1 GDP data were slightly weaker than the consensus had expected, but underlying growth momentum remains resilient. We still believe that price pressures rather than any concern over growth are the big risk facing Indonesia. Accordingly, our view …
The Reserve Bank of Australia (RBA) held its cash rate at 4.75% today, as expected. Nonetheless, core inflation rose in Q1 while above-trend GDP growth looks likely over 2011-12. The upshot is that we still expect the RBA to resume its policy tightening …
3rd May 2011
The Reserve Bank of India surprised the markets with a 50bp hike to the repo rate to 7.25% today, whereas both we and the consensus had expected 25bp. The accompanying annual Monetary Policy Statement has prompted us to revise up our forecast for the repo …
We expect the Reserve Bank of India to raise the repo rate by another 25bp to 7.0% on Tuesday. Recent data show that inflation has picked up again. Moreover, there are growing signs of demand-pull pressures. We also expect the RBI’s policy statement to …
2nd May 2011
As expected, the Reserve Bank of New Zealand (RBNZ) left its policy rate on hold at 2.5% today, after cutting by 50bp last month in response to the Christchurch earthquakes. Admittedly, the RBNZ will be in no rush to reverse that move. However, unlike the …
28th April 2011
Korea's economy grew at a faster pace in Q1, broadly in line with expectations. Despite greater uncertainty about global demand, we think policy-makers are right to worry more about inflation than growth. As such, we expect the Bank of Korea (BoK) to …
27th April 2011
Growing uncertainty about global growth is prompting some policymakers in the region to adopt a “wait and see” approach. However, we think that most of these concerns will soon dissipate. The key point is that, unlike in the major developed economies, …
25th April 2011
Inflation has risen further as food and fuel prices remain high and strong growth has left little spare capacity in many economies across the region. Policy interest rates will move up further, but the tightening cycles should stop with rates at levels …
21st April 2011
The Bank of Thailand (BoT) hiked its policy rate by 25bp to 2.75% today, as was universally expected. As with elsewhere in the region, keeping a lid on inflation remains the key concern for policymakers. We expect another 25bp hike at the next meeting in …
20th April 2011
The Bank of Thailand (BoT) announces its policy rate decision on Wednesday and we expect the repo rate to be raised by 25bp for the fourth meeting in a row, to 2.75%. Prospects for domestic demand remain bright, while core inflation has continued to …
18th April 2011
Inflation data released today strengthen the case for the Reserve Bank of India (RBI) to continue raising rates. We expect the repo rate to be hiked in May, followed by even more tightening this year. … Another jump in Indian inflation confirms case for …
15th April 2011
The Monetary Authority of Singapore (MAS) tightened policy today by re-centring its exchange rate target band at a higher level. Q1 GDP figures, also released today, were very strong and show that Singapore’s economy continues to perform well. …
14th April 2011
The Central Bank of Sri Lanka (CBSL) left its two key interest rates unchanged today, as was widely anticipated, but tightened policy by increasing its reserve requirement ratio. Unlike other central banks in the region, the CBSL is yet to start a …
12th April 2011
Bank Indonesia (BI) left its reference rate at 6.75% today, as was universally expected. Nonetheless, inflation remains uncomfortably high while the economy is set to grow at an above-trend pace in 2011-12. The upshot is that the pause in BI’s tightening …
The Bank of Korea (BoK) kept its base rate at 3.0% today, as expected. The strengthening won is doing some of the heavy-lifting in terms of policy tightening, but the central bank will not want to rely too much on the inherently volatile currency markets. …
Singapore’s GDP growth probably remained strong in Q1, keeping overheating as the main policy concern. With headline inflation remaining well above the central bank’s 3-4% target range, and wages rising at a rapid pace, we expect the Monetary Authority of …
11th April 2011
The Reserve Bank of Australia (RBA) held its cash rate at 4.75% today, as was universally expected. Nonetheless, above-trend GDP growth still looks likely in 2011-12 and will eventually lift price pressures. We continue to expect the RBA to hike its cash …
5th April 2011
The Reserve Bank of Australia (RBA) is likely to keep its cash rate on hold at 4.75% on Tuesday. Natural disasters, both local and overseas, have created an element of uncertainty and will probably discourage the central bank from raising rates for some …
4th April 2011
Manufacturing PMIs for March, released overnight and today, remained buoyant for India, but declined in Korea, Taiwan and dropped even more sharply in Australia. New export orders accelerated for both Taiwan and South Korea, possibly reflecting orders for …
1st April 2011
Economic growth in the region has remained healthy, while inflation has continued to climb. The disruption stemming from Japan’s 11th March earthquake and tsunami has increased uncertainty around the economic outlook, but should not derail growth within …
31st March 2011
Following today’s expected rate hike, the outlook for monetary policy in Taiwan depends largely on what happens to property prices. As things stand, rates are likely to rise again at the next quarterly meeting, but continued tightening into 2012 is not a …
Data released today show that Sri Lanka’s economy grew by 8.0% in 2010 as a whole, as we had long been expecting. The central bank (CBSL) left policy rates unchanged at its meeting in March, but we are sticking to our view that continued rapid GDP growth …
30th March 2011
