BANGKOK • Inflation in South-East Asia’s two biggest economies, Indonesia and Thailand, diverged in March, putting the two nations on possibly different monetary policy courses.
Consumer-price growth in Indonesia eased to 2.48% last month, below the central bank’s 2.5% to 4.5% target band, while in Thailand, inflation quickened to a six-month high of 1.24%, climbing back into the 1% to 4% range.
The data gives the Bank of Thailand reason to stick to a more hawkish stance, while in Indonesia, the figures back up policymakers’ shift to a pause after last year’s interest-rate hikes. Thailand’s central bank raised its benchmark interest rate once last year to 1.75% in December, with governor Veerathai Santiprabhob saying yesterday it’s still low compared to peers.
Bank Indonesia (BI) has kept its policy rate at 6% this year ahead of April’s election.
“This is the best data that any economic policymakers could get — the decline in food prices accompanied by the robust core inflation that is indicative of a still healthy purchasing power,” Satria Sambijantoro, an economist at PT Bahana Sekuritas in Jakarta, said referring to Indonesia’s easing inflation.
Still, the implications of subdued prices are less straightforward for BI’s monetary policy as it comes out as an external balance-targeting monetary authority and not sticking with the conventional inflation-targeting framework adopted by most central banks in emerging economies, Sambijantoro said. — Bloomberg