Sri Lanka, emerging Asia would gain from prudent monetary policy: S&P

Feb 15, 2008 (LBO) – Countries that resist pressure to ease monetary policy would make long term gains, the rating agency Standard and Poor's said in a report on 11 Asian nations that showed Sri Lanka had the highest forecast inflation in 2008. "Some central banks will likely yield to calls to support growth and employment by easing monetary policy despite the risk of price pressures," S & P said in a report released Friday.

"But those that respond with prudent monetary policy changes should help to anchor inflation expectations, stimulating financial and economic development.

"Over time, this will increase financing options for their governments, boost the development of domestic capital markets, and improve economic growth potential.

"The determination of central banks to fight inflation will preserve or strengthen the rating fundamentals of their respective governments."

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The report showed that Sri Lanka had the highest expected inflation of over 12 percent while Indonesia, Pakistan and Vietnam had rates of 8 percent or higher. Mongolia had a forecast inflation rate of 6.5 percent in 2008.

China, India, Thailand,