WASHINGTON, Oct. 14 (BNA) – The International Monetary Fund said most Asian central banks should tighten monetary policy further as rising commodity prices and the depreciation of their currencies, driven by the continued rise in US interest rates, push inflation above its targets.
China and Japan are exceptions, said Krishna Srinivasan, director of the IMF’s Asia and Pacific Department, where the economic recovery has been weaker, the recession remains large and inflation has not risen sharply as elsewhere.
He said many Asian currencies fell “very sharply” as the tightening of US monetary policy widened interest rate differentials, which helped increase import costs for countries.
“While our baseline is for inflation to peak by the end of the year, a significant depreciation in the exchange rate could lead to higher inflation and greater persistence, especially if global interest rates rise more aggressively, and require faster monetary policy tightening in the future,” Srinivasan said. Asia”. At a press conference during the annual meetings of the International Monetary Fund and the World Bank in Washington.
Srinivasan said the significant depreciation of the currency and higher interest rates may also lead to financial pressures in the high-debt Asian countries.
“Asia is now the world’s largest debtor and besides being the largest saver, many countries are at high risk of debt distress,” he said.
Most of the increase in Asia’s debt is concentrated in China, but it also appears in other economies, Sanjaya Panth, deputy director of the IMF’s Asia and Pacific Department, told Reuters.
“Some form of market pressure cannot be ruled out. But the relatively strong position of many economies gives us comfort,” he said, noting low external debt levels, high reserves and resilient financial systems.
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