HSBC urges Asia's central banks to hike rates rapidly

Inflation, asset bubbles and excessive investment are the likely outcomes unless Asia tightens monetary policy without delay, says HSBC's Frederic Neumann.

Asia is feasting on a massive monetary stimulus. This made sense when the world was dangling over the precipice. But, this is no longer the case.

The central banks in Asia most attuned to US growth risks are in Korea, China, Taiwan, Singapore, and Thailand, “but, the needle needs to be pushed back to neutral everywhere, quickly,” said Frederic Neumann, co-head of Asian economics at HSBC.

Interest rates in the region are on average 150bp to 200bp below neutral, he told FinanceAsia. China, India and Indonesia, in particular, need to act rapidly, and the time for small, incremental rate hikes has ended.

The willingness of policymakers to act should...

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