Research Briefing | Dec 8, 2021

APAC’s regional monetary policies to continue to diverge in 2022

Ipad Frame (76)

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.
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