Seoul: Asia's fight against price gains lacks "urgency" and policymakers need to raise interest rates more aggressively to restrain inflation expectations, Morgan Stanley Asia's Stephen Roach said.
Officials in export-dependent Asian economies are concerned global demand may falter and hurt growth, making them reluctant to tighten monetary policy quickly, Roach, non-executive chairman of Morgan Stanley Asia Ltd, said in a note yesterday.
"The only effective anti-inflation strategy entails aggressive monetary tightening that takes policy rates into the restrictive zone," Roach said.
"The longer this is deferred, the more wrenching the ultimate policy adjustment, and its consequences for growth and employment, will be. With inflation — both headline and core — now on an accelerating path, Asian central banks can't afford to slip further behind the curve."
Asian economies have led a global recovery that's been restrained by Europe's sovereign-debt crisis and US unemployment. The region's central banks may need to raise rates further to limit the risk of overheating in their economies and prevent a "hard landing," International Monetary Fund Managing Director Dominique Strauss-Kahn said last week.
Currencies rise
Investors are pushing the region's currencies higher amid expectations of "a good deal more" tightening from Asian central banks, Roach said.
Accelerating consumer-price gains in the region have prompted Thailand, South Korea, India and Indonesia to increase rates this year.
