Price Wars: The Return of ASEAN+3 Inflation?

The recent rise in global inflation has been underpinned by both demand and supply side factors. On the one hand, the outlook for demand has improved with the recovery of the global economy from pandemic lows; on the other, supply-related bottlenecks and price hikes have contributed to greater price pressures.

In the United States, rising inflation has heightened expectations of policy normalization by the Federal Reserve, resulting in some volatility in global markets. Indeed, the Fed has just signaled that its bond-buying taper could start “soon.” This note analyzes the implications of both the global and domestic inflationary environment for ASEAN+3 economies and financial markets, and discuss the risk scenarios where inflation could remain elevated for a prolonged period.

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