And worrying UK inflation figures may extend a dark shadow over Asia. Figures on Wednesday showed that Britain was the only country in western Europe with double-digit inflation in March, prompting several banks to raise their UK rate outlook.
UK money markets are pricing in a further 75 basis points of tightening this year, taking the base rate up to 5%. Former BoE policymaker Andrew Sentence told BBC radio rates might have get closer to 6% to defeat inflation.
This matters for the rest of the world because it is a stark reminder of how sticky inflation can be and a warning to central banks that have paused their hiking cycles – of which there are several in Asia – to guard against complacency.
The inflation focus turns to New Zealand and Malaysia on Thursday, and forecasts for both are not all that encouraging. Malaysia’s annual CPI inflation is only expected to slow a tenth of one percent to 3.6%, and New Zealand inflation in Q1 is expected to rise.
Meanwhile, Australia’s central bank governor Philip Lowe addresses the media on Thursday and India’s central bank releases the minutes of its last policy meeting.
China’s central bank announces its latest decision on one- and five-year loan prime rates, and figures from Japan are expected to show the trade deficit widened in March.
