Expectations that the fall in oil prices will trigger a wave of interest rate cuts across Asia are probably wide of the mark. Admittedly, Pakistan, India and Singapore have each loosened monetary policy this month. In each case though, loosening had seemed likely in early 2015 for some time. At most, lower oil prices may have encouraged policymakers there to act sooner. Elsewhere, policymakers will be aware that cheaper oil should ultimately boost real demand and so are likely to “look through” the immediate fall in inflation. In many places, policymakers will also have one eye on risks in the banking sector, amid continued worries over the unsustainable pace of credit growth.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services