Why the growth-inflation trade-off is lower than you think
The interest rate threshold needed to bring inflation under control in Asia is lower than popularly perceived
Add BT as a preferred sourceINVESTORS are still intensely focused on inflation. The debate is now centred around 2 issues: how sticky inflation will be, and how much central banks need to tighten monetary policy to bring inflation back under control.
Some investors argue that inflation will remain at higher levels for some time and hence central banks need to take policy rates into deeply restrictive territory, even if it means that growth will decelerate meaningfully below trend.
We, however, argue that the sacrifice ratio (the amount of growth sacrifice needed to bring inflation down) is not as high as many think. We think the threshold of interest rates needed to bring inflation under control is lower than what is perceived to be the case.
TRENDING NOW
Father-and-son duo Raj Kumar and Kishin in exclusive due diligence to buy Scotts Square
When every phone becomes a satellite phone, what happens to Asia’s telcos?
Koh Brothers Eco Engineering faces up to S$57.6 million in potential legal liabilities
Too little, too late? Manila’s billion-dollar bid to ignite its sputtering EV industry
