COMMENT Asian governments and central banks have belatedly woken up to the menace of rising inflation. The Indonesian and Philippine central banks have both raised their benchmark interest rates by 25 basis points, but it is not enough, and policymakers elsewhere in Asia must show greater vigour.
A quarter of a percentage point on interest rates will still leave monetary policy too loose in Asia’s current economic climate. Indonesia’s rate rise to 8.5 per cent followed a similar increase in May, but that was the first upward move since 2005, and inflation is already above 10 per cent. Manila’s rise to 5.25 per cent was the first in three years, and inflation is at a nine-year high of 9.6 per cent.
