‘This is an expert view on the need for rate hikes in the Asian region.’
S&P Global Ratings predicts Malaysia's overnight rate (OPR) policy will increase by 50 basis points or less than 50 basis points this year due to the crisis that is squeezing inflationary pressures as well as the aggressive actions of the US Federal Reserve (Fed).
According to Louis Kuijs, S&P Asia-Pacific chief economist, high inflation as well as US interest rates indirectly put pressure on the Asia-Pacific economy and reflect the current situation, so central banks will be forced to raise interest rates in areas where inflation has already surpassed target.
He added that despite the issue of inflation and capital outflows being a concern, central banks also need to focus on economic growth.
Meanwhile, Asia-Pacific monetary policymakers will face difficult times as the Russia-Ukraine conflict adds to global inflationary pressures while the Fed's hawkish policy tightening actions in balancing its balance sheet.
It indirectly adds pressure on regional central banks to raise rates to meet inflation expectations, maintain credibility, support national currencies or avoid financial instability.
However, according to Kuijis, they predict that some central banks will implement some tightening or there may be some that are not behind the issues.
