ASEAN-6: Varied monetary tightening following energy shock – DBS

How ASEAN-6 and India Are Navigating Rising Energy Costs

Economists Radhika Rao and Chua Han Teng from DBS Group Research analyze the responses of ASEAN-6 countries and India to escalating energy prices and renewed inflationary pressures. According to their assessment, Singapore has already responded by adjusting the SGD NEER band. Meanwhile, the Philippines and Vietnam are poised to be among the first to raise interest rates, and Malaysia are expected to take a more balanced approach, and both Thailand and India are likely to proceed cautiously, relying initially on fiscal measures to address these challenges.

Energy Price Surges Prompt Policy Shifts Across the Region

With ongoing tensions in the Middle East, central banks in the ASEAN-6 and India face a renewed challenge: managing imported energy-driven inflation while striving to maintain domestic economic growth.

The order and pace of monetary tightening among ASEAN central banks will largely depend on how much higher oil and gas prices are passed on to local consumers, as well as the potential for subsidy reductions or fuel price hikes—factors that could significantly influence price stability.

Policy responses are expected to diverge across the region. If energy prices remain high, the Philippines and Vietnam are likely to take the lead in tightening monetary policy. Indonesia and Malaysia are anticipated to adopt a moderate stance, while Thailand and India are expected to move more slowly, showing less urgency in adjusting their policies.

(This content was produced with the assistance of artificial intelligence and subsequently reviewed by an editor.)