Central bankers from Australia, England and Thailand warned that the monetary policy outlook remains uncertain, despite growing global expectations that interest rates are at or close to their peak.

The Reserve Bank of Australia is grappling with “a wide range of uncertainties and experiences,” Governor Michele Bullock said at a monetary conference in Hong Kong. Economic activity has held up more than expected and services inflation is proving “a bit sticky,” she added.

Bank of England Deputy Governor Dave Ramsden noted that he’s becoming more confident about the outlook, though many uncertainties remain. Markets have internalized that rates will remain higher for longer, he said, while noting the volatility of the rates markets and its sensitivity to data releases.

Higher interest rates have boosted bank profitability, but the effect will be short term, said Bank of Spain Governor Pablo Hernandez de Cos. He warned that at some point credit risks may arise, and there may be losses in assets.

“We are sending the message that the banking sector should remain very prudent,” he said, suggesting banks should use their high profitability to increase their resilience.

Bank of Thailand Governor Sethaput Suthiwartnarueput expressed concern about the high level of household debt, which stands at about 90% of gross domestic product. Other factors complicating policy include that credit growth has turned negative for small and medium-sized businesses, and tourism from China has not returned to pre-pandemic levels.

In addition, Sethaput said Thailand and some other emerging markets may end up with lower rates than in the US, something that hasn’t been seen before.

“We’re in a pretty decent position to handle the volatility,” he said. “That said, I think it’s important not to be too sanguine.”

Hong Kong Financial Secretary Paul Chan gave the opening remarks at the conference organized by the Hong Kong Monetary Authority and the Bank for International Settlements.

The trend toward deglobalization and de-risking is a concern, Chan said, warning it would hinder economic growth, limit access to markets and impact supply chains. On the plus side, a full-blown decoupling seems less likely due to a recent easing in geopolitical tensions.

--With assistance from Suttinee Yuvejwattana and Michael Heath.