Malaysia May Reduce Monetary Stimulus as Indonesia Holds Steady

As you may already know, Asian countries are leading the world economy out of the worst slowdown since World War II. With the economies strengthened, it is not surprising that policy makers in China, Australia, Vietnam and India have started to tighten monetary policy to combat inflationary pressure and reduce the risk of asset bubble. There are increasingly clear signs that the global economy is strongly recovering and heading towards prosperity.

Many economists surveyed by Bloomberg News expect that Malaysia will be the next Asian country to implement contractionary monetary policy as its recovery strengthens, either raising the interest rate or the reserve requirement. Meanwhile, with inflation still in check, perhaps Indonesia will simply keep the interest rate unchanged since it does not want to curb lending at this point.