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Asia-Pacific central banks likely to keep rates on hold
Rising raw material prices are eating into profits at Chinese manufacturers even as they step up output to meet a post-Covid revival in demand. Industrial profits were up by just over 83 percent in the first five months of the year, following a 106 percent increase in April, according to figures released last week. And data out on Friday is likely to give more evidence of higher prices, with Moody’s Analytics forecasting the Producer Price Index to have risen 9.4 percent in June, picking up pace from May’s 9 percent increase on higher raw material and commodity prices. Consumer prices likely rose 1.5 percent, up from the previous month’s 1.3 percent increase, the ratings agency says.
Elsewhere in the region, central banks are likely to keep borrowing costs on hold to avoid jeopardising the post-Covid recovery. The Reserve Bank of Australia announces its interest rate decision this afternoon. The cash rate is expected to remain at a record low 0.1 percent.
“Although domestic demand has rebounded strongly and the pace of the labour market revival has exceeded expectations in recent months, wage growth and inflation have remained relatively subdued over this period, necessitating an extended phase of conducive policy settings,” Moody’s says. “Moreover, the recent disruptions caused by localised outbreaks, although likely to be temporary, will increase the odds of the central bank expanding its current quantitative easing program by undertaking a third round of bond purchases in the coming months”.
Malaysia’s central bank is also expected to keep rates on hold at 1.75 percent. Bank Negara Malaysia announces its decision on Thursday. Malaysia has extended a Coronavirus lockdown until daily cases drop below 4,000. Malaysia and Australia are both stepping up their vaccination programmes following a resurgence in infections.
Source: https://www.khmertimeskh.com/50888029/asia-pacific-central-banks-likely-to-keep-rates-on-hold/