SINGAPORE, Oct 4 (Reuters): Soaring oil and commodity prices are forcing most Asian central banks to raise interest rates, reining in months of expansionary monetary policy.
But analysts say interest rates won't rise uniformly throughout the region because central banks will be loath to scuttle a recovery in domestic consumer demand.
Indonesia and Thailand may raise rates faster than Taiwan, South Korea and the Philippines, while Malaysia and China may not raise rates at all, they say.
Concerns over inflation have risen as governments in Thailand, Indonesia and Malaysia removed fuel subsidies to let consumers feel the pinch of expensive oil, pushing inflation in some countries to levels not seen since the 1998 financial crisis.
Policy makers from other parts of the world including Europe, Canada and New Zealand share that concern, he said.
No Asian central bank has come close to matching the pace of rate rises in the United States, where the policy rate has risen 275 basis points since June 2004.
Thailand has raised its policy rate 200 basis points since August 2004. Indonesia raised rates 150 basis points in a matter of weeks.
Taiwan and the Philippines have tightened rates and Korea could be on the verge of doing so.
Singapore is expected to continue with a tightening stance in place since April 2004 that allows a gradual appreciation of the trade-weighted exchange rate.
Indonesia's consumer price index is already rising at more than 9 per cent on an annual basis and some analysts have forecast inflation will rise several percentage points in coming months as a result of the fuel price hikes.
Thailand has also suffered from a weak currency and, after eliminating state subsidies on domestic fuel prices, its headline inflation is running at a seven-year high.