Headline inflation in Malaysia has been among the lowest in Asia but that is soon set to change now that the government is pushing ahead with long-planned subsidy cuts aimed at improving the public finances. Pakistan’s budget announced this week envisages a further tightening in fiscal policy. This will weigh on growth but should help to persuade the IMF of the government’s commitment to fiscal discipline. Meanwhile, the Bank of Korea minutes from its May meeting suggest the central bank is in no rush to cut interest rates, but with growth set to slow, we are sticking with our view the BoK will cut rates at its October meeting.
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