As dark clouds loom for the global economy, Asian central banks are stepping up easing of monetary policy in a bid to bolster growth.
All eyes are on central bank meetings in Indonesia and Phillippines on Thursday – both countries were among the continent's most aggressive rate hikers in 2018. But with subdued inflation and an uncertain global outlook, they're looking to change course to support growth.
Many Asian central banks looked towards tightening in 2018 to support their currencies and prevent capital outflows in response to the U.S. Federal Bank's repeated rate hikes, while staving off inflation. Indonesia and the Philippines raised interests rates by 175 basis points during the year.
While Indonesia has signaled that cuts are on the cards, it is expected to leave its benchmark rate unchanged for now, analysts said, Reuters reported. The Philippines is expected to add to the quarter-point reduction it made in May despite staying within the 2-4 percent target range for inflation, as economic growth has been disappointing.
Asia Tightening
The Monetary Authority of Singapore (MAS) kept its policy unchanged in April after two rounds of tightening in 2018. India lowered its benchmark rate in February and April by a quarter point each time, reversing last year's 0.5 percent rise.
European Central Bank chief Mario Draghi said on Tuesday the ECB would ease policy again if inflation fails to accelerate, prompting many to believe the Fed would act similarly.
«With increased odds of the Fed easing, we don't think Asian central banks will resist easing pressure for too long,» ING analysts said in a note, «Reuters» reported.
