Central banks running out of options as recovery falters in Asia

South Korea’s economy is being cushioned by soaring exports even as rolling social distancing restrictions damp consumer spending – prompting the government to pledge more fiscal spending to create jobs. The Bank of Korea is also expected to remain on hold when it meets tomorrow.

SINGAPORE: Asia’s surging coronavirus infections and slow pace of vaccinations is testing the limits of what central banks can do to further support what, until recently, had been the world’s stand out economic recovery.

With interest rates already low, the likely policy response will centre on more government borrowing, relegating central banks to a supporting role. That backdrop will overshadow decisions this week where policymakers are expected to keep rates on hold – Indonesia, South Korea and New Zealand.