Latest Fed Hike Reverberates Through Asia as Policy Makers React

(Bloomberg) -- The Federal Reserve's latest 75 basis points interest-rate hike reverberated through Asia, triggering some central banks to warn further policy tightening will be needed.

Here's a snapshot of the responses:

Hong Kong 

The Hong Kong Monetary Authority raised its benchmark interest rate for a sixth time, moving in lockstep with the Fed due to the currency's peg to the dollar. 

HKMA Chief Executive Eddie Yue warned the public to prepare for further increases in commercial interest rates and the Hong Kong dollar interbank rates. Continuous rate hikes, though, “will not affect the financial and monetary stability of Hong Kong,” he said in a statement. “Our monetary and financial markets continue to operate in a smooth and orderly manner.”

Eddie Yue, head of the Hong Kong Monetary Authority.

Malaysia

Bank Negara Malaysia increased its benchmark interest rate for a fourth straight time on when it lifted the overnight policy rate by 25 basis points to 2.75%. 

“Any adjustments to the monetary policy settings going forward would continue to be done in a measured and gradual manner, ensuring that monetary policy remains accommodative to support sustainable economic growth in an environment of price stability,” the central bank said.

Philippines

The Philippine central bank will increase its benchmark interest rate by 75 basis points at its Nov. 17 meeting to match the Fed hike, Governor Felipe Medalla said. The increase in the overnight reverse repurchase rate from the current 4.25% will take effect after the scheduled meeting in two weeks.

Bangko Sentral ng Pilipinas “deems it necessary to maintain the interest rate differential prevailing before the most recent Fed rate hike, in line with its price stability mandate and the need to temper any impact on the country's exchange rate of the most recent Fed rate hike,” said Medalla.

Taiwan

Taiwan's central bank won't necessarily follow the Fed's latest hike with an increase of its own, Governor Yang Chin-long said. 

“The US is hiking due to its own considerations, while Taiwan also has its own unique conditions to take into account,” he said during a session with lawmakers. “So Taiwan doesn't have to hike just because the US is hiking.”

India

Meantime, India's monetary policy rate setters are meeting to write a letter to the government on why they failed to keep inflation within a 2%-6% mandated range for three straight quarters.

The rupee's drop to a record low against the backdrop of an aggressive Fed tightening is also complicating the RBI's inflation fight. Still, most economists surveyed by Bloomberg earlier this week don't expect rate action Thursday. 

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