Surging prices nudge Asia's reluctant central bank hawks off the sidelines

By Leika Kihara and Wayne Cole

April 7 (Reuters) - Some Asian central banks are shaking off their long-held reluctance to follow their global peers in lifting benchmark interest rates off historic lows, as the Ukraine war blows consumer prices well out of policymakers' comfort zones.

The region's economies have largely lagged U.S. and European reopenings from the pandemic and central banks in Australia, India and Southeast Asia have up until now mostly looked past the inflation pressures caused by global supply snags, and focused more on shoring up their recoveries.

This week, however, there has been a marked shift in the language of some of the region's less hawkish central banks on worries the renewed surge in commodity costs caused by Russia's invasion of Ukraine could destabilise their economies.

Australia's central bank on Tuesday dropped a previous pledge to be "patient" in its assessment of current conditions, taken widely as a signal that the door was now open to the first interest rate increase in more than a decade.

Reserve Bank of Australia (RBA) Deputy Governor Michele Bullock said on Wednesday the change in the policy outlook reflected growing evidence of inflation pressures.

"It seems external inflation dynamics have become enough for the RBA to pre-emptively flag a shift," said Ben Jarman, an economist at JPMorgan.

"The RBA guidance suggests upcoming consumer price index and labour cost data are likely to clinch the case for normalisation," he said, projecting the first rate hike to come in June from the previous forecast for November.

Setting the global pace, the U.S. Federal Reserve raised rates for the first time since 2018 last month and looks on track for an aggressive tightening cycle to fight surging inflation.

In the Philippines, central bank governor Benjamin Diokno said on Tuesday he was ready to take "pre-emptive action" if "inflation expectations" risked becoming "disanchored."

His comments contrast with more passive remarks in March about being "ready to respond" and follow data that showed consumer inflation nudging the upper end of the central bank's projected range. Analysts currently expect the bank to raise its benchmark interest rate in the second half of this year.

The Reserve Bank of India is not expected to raise rates at its meeting on Friday. But inflation holding above the upper end of the central bank's 6% threshold has cast doubt on its current strategy of keeping rates low to bolster growth.