Asia enters the era of interest rate hikes

    In order to suppress inflation, the Central Bank of India suddenly announced an interest rate hike of 0.25% on the 11th, raising interest rates for the first time in 15 months. The benchmark lending rate reached 8%. Analysts said that if the inflation rate continues to close to double digits, it is expected that the Bank of India will continue to tighten the currency further. The interest rate hike cycle in Asia has begun quietly. The Central Bank of India announced the news of raising interest rates suddenly after the close of the Indian financial market. The Central Bank of India pointed out that this is the first interest rate hike since March 2007 in order to curb inflation expectations.　　India is the fourth country in Asia to raise interest rates this month in order to combat the rising inflation rate. The central banks of the Philippines, Vietnam and Indonesia have announced interest rate hikes.

    The official data released last Friday pointed out that the annual inflation rate as of May 24 reached 8.24%, a three-and-a-half-year high. Analysts pointed out that as India just announced a substantial increase in oil prices, the inflation rate is expected to soar above the 9% mark in early June, reaching a 13-year high. Both Lehman Brothers and Standard Chartered Bank predict that India's inflation rate may rise to 9.5%. Market analysts also expect that the Indian central bank will continue to raise interest rates in the future. HSBC senior economist Windsford pointed out: “The inflation rate is approaching double digits, and the central bank cannot sit idly by.” 　　 Sudden interest rate hikes may become the Indian stock market. Not bad, SBI Asset Management’s fund manager Charlotte said: “A hike in interest rates represents a serious inflation problem. It is foreseeable that there will be a wave of panic selling in the stock market tomorrow.”

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