Capital Economics: Some emerging market central banks may tighten monetary policy.

Economists at Capital Economics wrote in a report that if energy prices remain high, some emerging market central banks may tighten monetary policy. The Philippines heavily relies on imported energy, and a rise in fuel prices could widen its current account deficit. These economists stated, "In Indonesia, despite facing some political pressure to support growth, the central bank's clear mandate to maintain exchange rate stability limits its flexibility." However, low inflation provides some central banks with more room to temporarily ignore soaring energy prices. The Thai central bank has room to further relax interest rates as the country faces weak growth and has experienced almost a year of deflation.