Economics
Surging Debt Will Make Asian Central Banks Cautious on Rates
- Robust growth offers window for official rates to be raised
- But tightening cycle is complicated by years of loose policy
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Years of cheap money across Asia have left a legacy of surging debt that will force the region’s central bankers to be cautious when they eventually follow in the footsteps of South Korea by raising interest rates.
In South Korea, whose borrowing costs were boosted on Nov. 30, household debt has ballooned to about 150 percent of disposable income. It’s an even larger 194 percent in Australia. In China, it’s companies feeling the strain with corporate debt equating to about 160 percent of gross domestic product.