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Asia pleads for the Fed to tighten, already

TOKYO – For Asia, this week’s widely anticipated Federal Reserve rate hike in Washington is the strangest of things: it’s maybe the first time the region has welcomed tighter US monetary policy.

It would be beyond shocking, economists agree, if Fed Chairman Jerome Powell’s team does not hike borrowing costs on Thursday. With US inflation at 40-year highs and Russia’s invasion of Ukraine sending energy costs skyrocketing, most expect the first quarter-point hike in the federal funds rate in three years. And there are signals of more to come.

The Fed could even go 50 basis points, though that’s something it hasn’t done since 2000. Nor is Powell known for favoring radical Fed moves.

The bigger point, though, is that China, Japan and the rest of Asia just want to get over with a Fed rate move markets have obsessed about for months. Just as important, the region fears the Powell Fed is already behind the inflation curve.

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