Rate Cut Bets Unravel Across Developing Asia on Oil Surge

Central banks across developing Asia are facing a sudden shift in their policy outlook as traders ramp up bets on an Iran war-driven oil shock, adding to inflation pressures that were already building before the latest crisis.

Overnight index swaps show a marked shift in pricing across much of Asia. The turnaround is most stark for India and the Philippines, where rate hikes are now expected instead of cuts, and while Thailand and Indonesia are still seen lowering borrowing costs, those probabilities are diminishing fast.