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2010 Asian monetary policy forecast to remain loose

Date: 17 Feb 2010

The region’s central banks will tighten monetary policy this year at a slower rate than many observers expect, according to Credit Suisse. But China and India stand out as exceptions.

Keywords (click to search): [Cem Karacadag] [Credit Suisse] [Asia] [inflation] [interest rates]

Aaron Pan

Asian central bankers will tighten monetary policy this year at a slower pace than market observers anticipate, according to Credit Suisse.

Expectations that policymakers across Asia will begin raising interest rates and exiting fiscal stimulus measures have contributed to declines in regional stock markets. The MSCI Asia-Pacific Index has fallen nearly 9% since reaching a peak on January 15.

But Credit Suisse argues that monetary policy in Asia will remain relatively loose, given that economic output is still below trend and inflation expectations are exaggerated, while credit growth generally remains at an unthreatening level.

“Markets seem impatient to price in the coming tightening,” Credit...

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