Inflation decelerated across Emerging Asia over the past year, with the y/y rate falling further in March in most of the economies we track. Inflation is also low by historic standards. Falling commodity prices and below-trend growth will continue to put downward pressure on prices over the next year or so. Low inflation should give central banks scope to keep monetary policy loose. Although there is a chance that Indonesia may tighten monetary policy before the end of the year, other central banks are likely either to cut rates further or keep them at their current low levels.
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