A run of low inflation buys the RBI some time before it has to move on rates, said Shilan Shah, economist at Capital Economics.
“The pressure to tighten policy over the coming weeks and months will build if the Middle East conflict intensifies and in particular if the rupee comes under further downward pressure,” Shah said.
Taiwan
Taiwan is set to report March inflation data on Wednesday, which will likely show early signs of price pressures from the energy supply shock.
Most banks expect consumer inflation to remain under the 2% target watched by the central bank, but see mounting risks ahead.
Given the mix of likely higher inflation and still-solid economic growth, economists reckon the central bank could make a hawkish shift later in the year.
Still, unless inflation significantly overshoots expectations in the coming months, policymakers will likely stay on hold when they next meet in June, ING economists said.
Taiwan also releases its March trade data on Friday. Exports likely remained strong during the month thanks to the AI-related demand despite the Middle East conflict. Economists’ estimates for export growth range from 20.3% to 35.5%.
Philippines, Thailand
The Philippines and Thailand are due to release inflation data for March, shedding light on how consumer prices in Southeast Asia are being influenced by the energy turmoil.
Both countries are particularly exposed to rising oil prices, given their heavy reliance on energy supplies from the Middle East.
The Philippine central bank expects inflation in March at 3.1%-3.9%. Inflation risks have intensified, fanned by the significant increase in domestic petroleum prices and higher rice prices, said Bangko Sentral ng Pilipinas.
DBS’s economics team expects the surge in energy prices to have snapped Thailand’s deflationary streak in March, noting the sharp rise in domestic fuel prices after the government removed price caps.
Write to Jessica Fleetham at jessica.fleetham@wsj.com and Fabiana Negrin Ochoa at fabiana.negrinochoa@wsj.com
(END) Dow Jones Newswires
04-03-26 0714ET