KUALA LUMPUR: More monetary tightening can be expected to round out the year in Australia, New Zealand, Singapore and Malaysia as price growth is trending higher, Moody's Analytics said.
Moody's Analytics said today's price rises were largely being driven by factors outside policymakers' control.
The clearest measure of success for central banks would be how successful they were in slowing price rises, it added.
"To date, the APAC (Asia Pacific) region has seen some modest improvement. Inflation has moderated in South Korea, Taiwan, India, the Philippines and Vietnam.
"Meanwhile, price growth is trending higher in Australia, New Zealand, Singapore and Malaysia. Given that, more monetary tightening can be expected to round out the year in those economies," it said.
Moody's Analytics said except for a handful of laggards (Malaysia, Indonesia and Thailand), central banks around the world were hiking interest rates with gusto.
Supply snarls and rising domestic demand had pushed inflation to uncomfortable levels, it added.
That had seen borrowing costs rise sharply as central banks desperately tried to rein in prices.
Moody's Analytics said central banks were hiking rates to temper domestic demand, hoping to align it with the constrained supply. "It's a delicate balancing act."
Broadly, the firm said central bankers were hoping to achieve three things: dampen household spending, take the heat out of the labour market, and prevent wages from rising too quickly.
"If they can achieve all that, inflation will subside. The challenge for central banks is how to do it without causing a recession," it said.
At the same time, Moody's Analytics said domestic demand around the world had surged, labour markets were tight and households were spending like "it's going out of fashion".
Labour markets are tightening in Japan, Malaysia and Hong Kong.
"Elsewhere, unemployment is trending lower despite rate hikes. We should see higher borrowing costs cool labour markets more meaningfully in coming months. For much of the region, growth in new job ads has slowed since the start of the year, suggesting demand for labour is easing," it added.