Bloomberg News quoted a Bank of America study as saying that inflation in Southeast Asian economies is expected to reach the highest level in a decade in 2022, laying the foundation for the entire region to begin tightening monetary policy. Faiz Nagutha, an economist at the bank, said at a media conference on December 30 that rising energy prices and the recovery of domestic demand and employment will push the inflation rate next year from an average of 2% this year to an average of 2.7%. Among the ten countries of the Association of Southeast Asian Nations (ASEAN), Vietnam and Indonesia are…
It is expected that inflation in Southeast Asian economies will reach the highest level in a decade in 2022, laying the foundation for the tightening of monetary policy in the entire region. Bloomberg News Quoting a study by Bank of America.
Faiz Nagutha, an economist at the bank, said at a media conference on December 30 that rising energy prices and the recovery of domestic demand and employment will push the inflation rate next year from an average of 2% this year to an average of 2.7%.
Among the 10 countries in the Association of Southeast Asian Nations (ASEAN), Vietnam and Indonesia may have seen the largest price increases.
Nagutha said: “Inflation already exists and will continue,” he added, adding that it may reach its peak in early 2022, and then it will fall back and remain at a relatively high level. The global inflation rate is expected to reach 4.3% next year, higher than the 3.9% expected this year.
Gradually decreasing, inflation forces interest rate hikes
The reason for the rapid increase in inflation is the combined effect of the following factors:
The US Federal Reserve (Fed/FED) may double down on the scale of asset purchases and start raising interest rates three times in June next year. In fact, the Fed decided to double the pace of reduction at its December 2021 meeting.
The acceleration of the Fed’s reduction in holdings, coupled with the acceleration of inflation, will put pressure on some ASEAN central banks to tighten monetary policy as soon as possible.Indonesia may increase the interbank lending rate by 75 basis points, Malaysia and Vietnam may increase by 50 basis points, while Thailand and the Philippines are expected to increase their key interest rates by 25 basis points each next year
Nagutha said that Singapore may further tighten monetary policy on the basis of a 50 basis point increase in the currency slope in April.
