KUALA LUMPUR: The Reserve Bank of Australia and Reserve Bank of India both raised interest rates on Tuesday, Nov 2 despite ever-present uncertainty regarding the global economic outlook.
Moody's Analytics senior economist Matt Robinson said the interest rate increases occured amid positive signals about the prospect of Asian economies against persistent sluggishness in advanced economies in Europe and the U.S.
'Tighter monetary policy confirms that inflation is the greater worry in Asia at present. The 25-basis point interest rate increases by each central bank -- the sixth this year by RBI and the seventh since October 2009 for the RBA -- are preemptive,' he said.
Robinson said recent consumer price index data showed inflation in both economies eased in the third quarter.
However, both economies are operating near full capacity. Statements from each central bank accompanying the decisions highlight the degree of concern that emerging price pressures in certain sectors could spillover and dislodge inflation expectations.
He noted that the interest rate increases by two major central banks in Asia come just a day before the Federal Reserve is expected to add further monetary stimulus in the U.S to boost growth.
'Additional tightening in Australia and India also follows China's decision to commence raising interest rates in October, and underscores the widening gap between Asia's buoyant economic situation and that faced by its North American and European counterparts,' he said.
Moody's Analytics senior economist Matt Robinson said the interest rate increases occured amid positive signals about the prospect of Asian economies against persistent sluggishness in advanced economies in Europe and the U.S.
'Tighter monetary policy confirms that inflation is the greater worry in Asia at present. The 25-basis point interest rate increases by each central bank -- the sixth this year by RBI and the seventh since October 2009 for the RBA -- are preemptive,' he said.
Robinson said recent consumer price index data showed inflation in both economies eased in the third quarter.
However, both economies are operating near full capacity. Statements from each central bank accompanying the decisions highlight the degree of concern that emerging price pressures in certain sectors could spillover and dislodge inflation expectations.
He noted that the interest rate increases by two major central banks in Asia come just a day before the Federal Reserve is expected to add further monetary stimulus in the U.S to boost growth.
'Additional tightening in Australia and India also follows China's decision to commence raising interest rates in October, and underscores the widening gap between Asia's buoyant economic situation and that faced by its North American and European counterparts,' he said.
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