The director of the International Monetary Fund (IMF) Asia and Pacific Department, spoke at a news conference.
Comments were board and discussed divergence across Asia. Summary points:
- Asian central banks may see scope to loosen monetary policy later this year as inflation moderates
- Average inflation in Asia fell to 2.6% in 2023 from 3.8% in 2022, with particularly swift progress in emerging economies
- “Many regional central banks are on course to reach their inflation targets in 2024. Provided policymakers hold steady until inflation is firmly reanchored, scope for monetary easing may emerge later in the year,”
- divergences … China’s near-zero price growth last year “fueling concerns about deflation” … and Japan’s inflation will likely remain above the central bank’s 2% target until 2025.
- there is a risk that divergent monetary stances in the United States and in Asia would trigger sharp exchange rate movements also this year
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As an update on Australian inflation and the currency, AUD continues to drip lower after improved data earlier:
- Australian Q4 headline CPI 4.1% y/y vs 4.3% expected
This article was written by Eamonn Sheridan at www.forexlive.com.
