South Korea and Singapore have become the latest Asian economies to tighten monetary policy in response to inflation risks stemming from the war in Ukraine.

The Bank of Korea on Thursday raised its benchmark interest rate to 1.5 percent for the fourth time since August, the highest level in nearly three years.central bank decision as inflation Asia’s fourth-largest economy hit 4.1 percent in March, up from a year earlier and more than double the Bank of Korea’s target range, up from 3.7 percent in February.

Separately, the Monetary Authority of Singapore, which relies on currency adjustments rather than interest rates to guide monetary policy, said it would raise the midpoint of the Singapore dollar’s trading range for the first time and speed up the pace at which the currency is allowed to move. more than ten years.

The city-state kept the trading range and composition of the currency basket secret to discourage speculation, but the Singapore dollar rose 0.7 percent to around $0.74 against the U.S. dollar after the Monetary Authority of Singapore’s announcement on Thursday.

The MAS announced the move as core inflation, which excludes accommodation and private transport, hit 2.3% year-on-year in the January-February period, up from 1.7% in the final three months of last year.

Singapore also raised its core inflation forecast for this year by 0.5 percentage points to 2.5-3.5% and raised its forecast for all items by 2 percentage points to between 4.5% and 5.5%. Economists also highlighted downside risks to the city-state’s gross domestic product growth, which was slightly lower than expected at 3.4 percent in the first three months of 2022.

The South Korean and Singapore decisions were announced a day after the Reserve Bank of New Zealand rate hike Half a percentage point, the biggest gain in 22 years.

From December 2021, New Zealand’s latest inflation figure came in at 5.9%, up from 1.4% a year ago. The country’s central bank expects inflation to peak at 7 percent in the first half of 2022.

Citing Korea and Singapore soaring costs Due to the war in Ukraine under the influence of the Covid-19 pandemic.

Analysts at ratings agency Fitch said rising commodity prices will continue to push up inflation across Asia and could lead to further rate hikes.

“Inflation in Asia[emerging markets]. . . is generally more low-key than much of the rest of the world,” they wrote in a note. “Tightening ahead of schedule is now likely, especially as commodity price moves accelerate Fed tightening. “

Consultancy Capital Economics expects the Bank of Korea to raise at least two more 25 basis points this year, which would bring the country’s benchmark interest rate to its highest level since early 2015.

But Clara Cheong, a Singapore-based global market strategist at JPMorgan Asset Management, said Asian economies vary widely, with inflation in the region more subdued than elsewhere.

“Overall, what we’re seeing is relatively modest inflation in this part of the world due to the delayed recovery from the pandemic,” she said, adding that China may ease monetary policy to meet its 5.5 percent target .cents per year growth target.

The moves by South Korea and Singapore are “unlikely to herald a wave of hawkishness from Asian central banks,” she added.