APAC’s regional monetary policies to continue to diverge in 2022
We expect monetary policy to continue to diverge across Asia Pacific (APAC) in 2022, with central banks in the advanced APAC economies (apart from RBA and BoJ) further normalising monetary policy, leading the US Federal Reserve.
What you will learn from this report:
- We see the BoK and RBNZ hiking rates 50bps and 125bps, respectively, as risks are seen as tilted more towards higher inflation and financial instability.
- In contrast, most emerging APAC economies will be in no hurry to tighten monetary policy in 2022. China’s monetary policy has already turned more accommodative.
- The new Omicron variant has increased the risks around the monetary policy outlook.
- If the variant dampens demand more than it exacerbates supply-chain disruptions, it could prove disinflationary.
- But the reverse is equally true. Thus, we see most central banks prioritising growth and not shifting policy materially.
APAC Key themes 2024 – A year of living cautiously
In 2024, the main influence on Asia is likely to be a global slowdown, particularly in China and the US. Moreover, governments have limited policy space to deal with these headwinds. Other negative influences, however, are set to ease further, including domestic inflation, external pressure on interest rates, and softening semiconductor prices. Overall, we expect a bumpy year as issues become more country-specific and policy responses and economic outcomes diverge.Find Out More
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