Economists are starting to price in possibility of a rate cut as early as next monthReal interest rates in South Asia are among highest in world, raising prospect of more dovish monetary policy in region.Sri Lanka, Pakistan and India rank in top five of world's major economies with highest inflation-adjusted interest rates.While negative real rates might be considered a sign of financial instability, a high inflation-adjusted benchmark interest rate is, on balance, a reason for central bankers to consider a looser policy stance.Finance Minister Arun Jaitley has already complained about high real rates, and economists are starting to price in possibility of a rate cut as early as next month.The other economies in top five are more of a mixed bag.A political crisis in Sri Lanka, which has highest real interest rate by far at 6.2 percent, forced central bankers there to turn their focus more to sluggish economic growth.
The central bank kept benchmark rate unchanged at end of last year after one cut and one hike earlier in 2018.Egypt could be headed for an interest rate cut if inflation remains low.
Pakistan took aggressive interest-rate action last year to curb a balance-of-payments crisis and may have more structural changes to make.
In Turkey, things are more complicated as officials must weigh a need to defend still-struggling lira versus temptation to juice an economy that's saddled with crippled growth.(Except for headline, this story has not been edited by TheIndianSubcontinent staff and is published from a syndicated feed.)