JPMorgan: High Oil Prices Could Trigger Asian Currency Tightening

BlockBeats News, March 12th, JPMorgan economists stated that the sustained high oil prices may prompt some Asian central banks to shift towards a hawkish monetary policy stance. The recent surge in crude oil and natural gas prices has posed a trade shock to many economies in the region.

They noted, "Across the region, fiscal policy is likely to be the first line of defense to cushion the impact on households." They mentioned that the rise in oil prices could increase the likelihood of policy tightening in Singapore and Malaysia, while reducing the possibility of rate cuts in Indonesia and the Philippines.

Their analysis suggested that whether the Bank of Korea will raise interest rates will depend on whether the oil price-driven shock persists and is significant enough to affect inflation expectations and generate a second-round effect on core inflation. (FX678)