Central banks: Asia and EM seen on hold this week – BBH

Brown Brothers Harriman’s (BBH) Elias Haddad anticipates the RBI, NBP, BCRP and BOK will all leave policy rates unchanged at upcoming meetings. However, the bank flags asymmetric risks: RBI could turn restrictive, NBP may validate hike expectations, BCRP faces upside inflation risks, and BOK could shift hawkish in its rate projections over the next six months.

Asia and EM central banks balance inflation risks

"The Reserve Bank of India (RBI) is widely expected to keep the policy rate unchanged at 5.25% for a second consecutive meeting (Wednesday). The risk is the RBI shifts its neutral stance to restrictive because of the worsening inflation outlook."

"National Bank of Poland (NBP) is widely expected to keep the policy rate unchanged at 3.75% after cutting rates by 25bps at the last March 4 meeting (Thursday). Watch out to see if Governor Adam Glapinski leans into or against rate hike expectations. The swaps curve price-in 60bps of hikes in the next twelve months."

"Peru’s central bank (BCRP) is widely expected to keep rates unchanged at 4.25% for a seventh consecutive meeting (Thursday). The risk of a hike cannot be ruled out after both headline and core CPI inflation quickened in March above the bank’s 1 to 3% target range."

"Bank of Korea (BOK) is widely expected to keep the policy rate unchanged at 2.50% for a seventh consecutive meeting (Friday). The risk is a hawkish shift in the Monetary Policy Board’s rate projection, with hikes replacing a steady rate outlook over the next six months."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)