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Why policy prudence is a virtue

The challenges facing policymakers today maybe a cakewalk compared with what lies ahead

Sonal Varma 

MOST central banks today are debating how to navigate the growing trade-off between growth and inflation. In reality, these trade-offs are not as stark for Asia yet. The growth recovery is progressing well. Reopening has lifted services, tech demand is strong, domestic monetary conditions are accommodative, and weakness in China has been offset by strength in the US. Inflation has finally caught up, and central banks are pivoting, but with policy rates generally low, further rate hikes are par for the course. 

The path ahead, though, does look more treacherous. 

Even though the risk of higher inflation in Asia is now broadly recognised, its magnitude is still underappreciated. If...

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