Should Asia Be Ready Before the Fed Raises Rates? This is the Economist's Explanation! - Kakiforex.com - Financial Market Media No. 1 in the World Should Asia Be Ready Before the Fed Raises Rates? This is the Economist's Explanation! Should Asia Be Ready Before the Fed Raises Rates? This is the Economist's Explanation!

June 22, 2021

Should Asia Be Ready Before the Fed Raises Rates? This is the Economist's Explanation!

 Asian countries need to curb the spread of the current coronavirus outbreak to prepare their economies before facing interest rate hikes by the Federal Reserve (Fed) in the future, the Asia-Pacific chief economist at Mood’s Analytics told CNBC.


Last week, the Federal Reserve (Fed) has signaled that an interest rate hike is likely to happen in 2023, which is faster than previously expected which says rates will rise at least in 2024.


Higher US interest rates will attract investors from abroad and central banks in other countries may also need to raise their interest rates as a defense.


By raising interest rates, it can help countries prevent from too much capital leaving their economies, but raising rates too quickly tends towards the risk of economic slowdown.



Steve Cochrane says that Asian countries need to control the spread of Covid before the Fed raises rates, so that the economy remains stable and can arrange policy shifts.


He also predicted the Fed would likely raise rates by 25 basis points per quarter starting in 2023. The dot plot, which the Fed uses to signal the outlook for interest rates, showed two increases that year.


Many economies in Asia including Japan, Taiwan and Malaysia have seen a surge in new Covid-19 cases in recent months forcing the government to implement a number of sanctions measures to curb the spread.


Earlier, the World Bank said in a report this month that economic output in two-thirds of East Asian and Pacific countries will remain below pre-pandemic levels until 2022.


Factors stifling economic growth in those countries include the widespread spread of epidemics and the decline in global tourism.