“A significantly more hawkish Fed arguably gives Asian central banks more reason to stay on the course of rapid policy tightening. But a closer look at the banks’ actions and policy statements reveals that the motivation for frontloaded rate moves remains primarily domestic. While the central banks acknowledge an increasingly challenging external environment, keeping inflationary expectations anchored is still their main concern.” Priyanka Kishore, Oxford Economics’ Head of India and Southeast Asia Macro Services, wrote in her op-ed to Nikkei.
“This is something that the region’s central banks should not lose sight of. With a recession all but confirmed in the U.S. and Europe, and COVID lockdowns leading to further gross domestic product downgrades for China, the outlook for Asia’s exports and growth is worsening by the day. “”Looking into 2023, the appropriate policy direction will be an extended rate pause to assess the slowed impact of monetary policy transmission.” She concluded.
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