SINGAPORE: Asia’s surging coronavirus infections and slow pace of vaccinations is testing the limits of what central banks can do to further support what, until recently, had been the world’s stand out economic recovery. With interest rates already low, the likely policy response will centre on more government borrowing, relegating central banks to a supporting role. That backdrop will overshadow decisions this week where policymakers are expected to keep rates on hold – Indonesia, South Korea and New Zealand. “In my view, there is little room for further monetary policy stimulus, at least in terms of traditional policy levers like interest rate cuts, ” said Tuuli McCully, head of Asia-Pacific economics at Scotiabank. The Bank of Korea is also expected to remain on hold when it meets tomorrow.

Source: The Star May 26, 2021 02:58 UTC