A recent report on Bloomberg titled “South Asia Tops the Ranks of World's Highest Real Interest Rates” written by Michelle Jamrisko, points out that Sri Lanka, Pakistan and India rank in the top five of the world’s major economies with the highest inflation-adjusted interest rates.

The report goes in to explain that “A political crisis in Sri Lanka, which has the highest real interest rate by far at 6.2%, forced central bankers there to turn their focus more to sluggish economic growth. The central bank kept the benchmark rate unchanged at the end of last year after one cut and one hike earlier in 2018”.

The report also notes that real interest rates in South Asia are among the highest in the world, raising the prospect of more dovish monetary policy in the region.

“India has one of the highest real interest rates in the world” report notes adding that negative real rates might be considered a sign of financial instability, a high inflation-adjusted benchmark interest rate is, on balance, a reason for central bankers to consider a looser policy stance.

Report said Indian Finance Minister Arun Jaitley has already complained about high real rates, and economists are starting to price in the possibility of a rate cut as early as next month.

Report further added that Egypt could be headed for an interest rate cut if inflation remains low.

“Pakistan took aggressive interest-rate action last year to curb a balance-of-payments crisis and may have more structural changes to make. In Turkey, things are more complicated as officials must weigh a need to defend the still-struggling lira versus the temptation to juice an economy that’s saddled with crippled growth” the report noted.