Asian central banks are seen to raise interest rates over the next six months, with a stronger dollar and rising oil prices keeping countries from Australia to Indonesia and South Korea on a tightening path.
Traders see an average 13 basis points of hikes in the Asia-Pacific region, excluding China, over the period, according to market implied policy rates. That compares with bets that rates will remain unchanged in developed markets excluding Asia while hefty cuts are seen in Europe, the Middle East and Africa as well as Latin America.
Central banks in Indonesia and the Philippines already raised interest rates in recent weeks and signaled they could tighten again. Other Asian monetary authorities, including India, are so far choosing to run down their foreign currency reserves instead, but economists say there’s a limit to how long that can continue.
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