Interest rates in the region have peaked this year, and rising oil prices will have little effect on inflation, according to Credit Suisse First Boston senior regional economist Dong Tao. 'Inflation is not an issue in Asia,' Mr Tao said. 'We do not anticipate any central bank in Asia will raise interest rates - period.' The main reason for optimism is that rates in the United States are not expected to be raised further this year, he said. The pressure on US interest rates has eased, says Credit Suisse First Boston, which forecasts growth has slowed to a Federal Reserve target of about 3.5 per cent, but Mr Tao warned that any shocks to the economy could trigger further rises in the US. 'If we see new hiccoughs . . . the Federal Reserve may raise interest rates again.' Domestic inflation would remain subdued, making it unlikely that any central bank would raise interest rates. The recent surge in oil prices would have little effect on inflation in the region as fuel formed only a small component of the consumer price index in Asian economies. Higher oil prices will have a larger effect on the region's current accounts, Mr Tao warned. After almost three years of deflation the mainland is expected to see rising prices in the second half, as demand for services recovers, he said. The mainland will widen the yuan's trading range in the next year and will make it fully convertible within three to five years as the economy is liberalised with the expected membership of the World Trade Organisation. Domestic demand is expected to play a bigger role in the region's recovery, which has so far been driven by exports. 'Asia's domestic demand will pick up - this is going to replace exports as the main engine of Asia's recovery,' Mr Tao said.