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Policy-makers need to rein in inflation expectations and thwart second-round effects on consumer prices. But interest-rate increases by Asian central banks may hurt growth in the region at a time when trade is slowing, Khor Hoe Ee, an official at the Monetary Authority of Singapore, said yesterday.

However, the Asian Development Bank (ADB) said yesterday that central banks in East Asia were moving too slowly to combat the threat of quickening inflation, which it warned seemed to be seeping into the broader economies of the region.

The Philippine central bank has raised interest rates at its last two meetings, while Bank Indonesia has boosted borrowing costs for three straight months. In Vietnam, rates were increased to 14 per cent, the highest in Asia, and Thailand raised its benchmark for the first time in two years last week.

"It will take a while for things to turn around in Asia, probably not until the second half of 2009," said David Cohen, director of Asian economic forecasting at Action Economics in Singapore. "The oil and commodity price shock has caused a lot of pain and there is still a lot of nervousness over the financial market turmoil."

There are few signs that price pressures will subside anytime soon, the ADB unit said, predicting inflation in the region will average 6.3 per cent this year, more than double the average in the 10 years to 2006, and ease to 4.6 per cent in 2009.

"Inflation will likely continue to plague much of emerging East Asia as record global energy and food prices seep down into overall economic activity," it said. "Rapidly rising inflation threatens to dampen consumer spending and risks a wage-price spiral that could derail the region's recent solid growth."

Asian central banks need "decisive tightening of monetary policies" to combat the rise in prices, said the unit, which makes forecasts separately from the ADB.

The ADB said Asia's developing economies would expand at the slowest pace in five years this year as easing US growth weighs on exports and accelerating inflation crimps consumer spending.

East Asia may expand 7.6 per cent, less than a December estimate of 8 per cent, according to a report released yesterday by the lender's Office for Regional Economic Integration in Manila. Next year's growth is also estimated at 7.6 per cent.