Booming exports of AI-related products have helped offset the drag from higher energy prices and should continue to support growth across most of Asia in the near term. The AI boom is not feeding through into increased price pressures, with the outlook for inflation instead dependent in large part on events in the Middle East and energy prices. Based on our assumption that oil prices remain around $100pb until year-end, we expect further interest rate hikes in Pakistan, Sri Lanka, the Philippines and Korea, and we also expect India to start tightening soon. Elsewhere, we expect central banks to leave rates unchanged.
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