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Fitch: Real Rates Positive on Average in EM Asia; Room for Rates to Fall

(The following statement was released by the rating agency) Link to Fitch Ratings' Report: APAC Sovereigns Chart of the Month - May 2016 www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=882223">https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=882223 HONG KONG, May 31 (Fitch) Real interest rates remain positive for most of emerging Asia (EM Asia) despite easy monetary policies across most of the region. This is mainly due to subdued underlying inflation stemming from low oil prices, Fitch Ratings says in a new report. Most central banks in the region have either eased monetary policy or kept rates on hold since early 2015 to support growth in a less favourable external environment. While the Philippines and Malaysia have stayed on hold, India and Indonesia have cut policy rates since early 2015. However, data suggest that the impact on domestic demand from higher lending activity is not as strong since the rate of credit expansion on average has remained unchanged over this period for most countries. Vietnam and Sri Lanka are the exceptions with credit growth on average between 15% and 20%. There remains room for interest rates to fall further, given positive real interest rates. Fitch believes the quality of policy management is likely to come into focus for sovereigns in this region when the US Federal Reserve increases its interest rates. The "APAC Sovereigns Chart of the Month" for May 2016 is available at www.fitchratings.com or by clicking on the link in this media release. Contact: Sagarika Chandra Associate Director Sovereigns +852 2263 9921 Fitch (Hong Kong) Limited 19/F Man Yee Building 68 Des Voeux Road Central Hong Kong Thomas Rookmaaker Director Sovereigns +852 2263 9891 Media Relations: Bindu Menon, Mumbai, Tel: +91 22 4000 1727, Email: bindu.menon@fitchratings.com; Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: leslie.tan@fitchratings.com; Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: wailun.wan@fitchratings.com. Additional information is available on www.fitchratings.com. ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.