2022 to bring higher inflation, rate hikes for Southeast Asia
Inflation in Southeast Asian economies is expected to hit its highest level in ten years in 2022, setting the stage for the start of monetary-policy tightening across the region, Bloomberg News cited a Bank of America study.
Higher energy prices and a recovery in domestic demand and employment will drive inflation to an average of 2.7 per cent next year, up from an estimated average of two per cent this year, the bank’s economist Faiz Nagutha said in a media briefing on December 30.
Among the ten countries of the Association of Southeast Asian Nations (ASEAN), Vietnam and Indonesia are likely to experience the steepest price growth.
“Inflation is here, and it’s here to stay,” Nagutha said, adding that it would likely peak in the early part of 2022 before coming off a bit and staying at elevated levels. Global inflation is seen to hit 4.3 per cent next year, up from 3.9 per cent expected this year.
Tapering, inflation forces interest rate hikes
The reason for the faster rise in inflation is a combination of the following factors:
The US Federal Reserve will likely double the pace of reducing its asset purchases and will deliver three rate hikes next year expected to start in June. At its December 2021 meeting, the Fed in fact decided to double the pace of tapering.
The faster Fed tapering, along with accelerating inflation, will put pressure on some ASEAN central banks to tighten its monetary policy sooner. Indonesia will likely hike the interbank interest rate by 75 basis points, Malaysia and Vietnam by 50 basis points, while Thailand and the Philippines are expected to raise their key rates by 25 basis points each next year
Singapore may further tighten monetary policy on top of a 50-basis point increase in the currency slope expected in April, Nagutha said.
Inflation in Southeast Asian economies is expected to hit its highest level in ten years in 2022, setting the stage for the start of monetary-policy tightening across the region, Bloomberg News cited a Bank of America study. Higher energy prices and a recovery in domestic demand and employment will drive inflation to an average of 2.7 per cent next year, up from an estimated average of two per cent this year, the bank’s economist Faiz Nagutha said in a media briefing on December 30. Among the ten countries of the Association of Southeast Asian Nations (ASEAN), Vietnam and Indonesia are...
Inflation in Southeast Asian economies is expected to hit its highest level in ten years in 2022, setting the stage for the start of monetary-policy tightening across the region, Bloomberg News cited a Bank of America study.
Higher energy prices and a recovery in domestic demand and employment will drive inflation to an average of 2.7 per cent next year, up from an estimated average of two per cent this year, the bank’s economist Faiz Nagutha said in a media briefing on December 30.
Among the ten countries of the Association of Southeast Asian Nations (ASEAN), Vietnam and Indonesia are likely to experience the steepest price growth.
“Inflation is here, and it’s here to stay,” Nagutha said, adding that it would likely peak in the early part of 2022 before coming off a bit and staying at elevated levels. Global inflation is seen to hit 4.3 per cent next year, up from 3.9 per cent expected this year.
Tapering, inflation forces interest rate hikes
The reason for the faster rise in inflation is a combination of the following factors:
The US Federal Reserve will likely double the pace of reducing its asset purchases and will deliver three rate hikes next year expected to start in June. At its December 2021 meeting, the Fed in fact decided to double the pace of tapering.
The faster Fed tapering, along with accelerating inflation, will put pressure on some ASEAN central banks to tighten its monetary policy sooner. Indonesia will likely hike the interbank interest rate by 75 basis points, Malaysia and Vietnam by 50 basis points, while Thailand and the Philippines are expected to raise their key rates by 25 basis points each next year
Singapore may further tighten monetary policy on top of a 50-basis point increase in the currency slope expected in April, Nagutha said.
