India, Thailand and New Zealand have cut interest rates. What does this mean for the Asia-Pacific?

The three countries’ moves are likely to be followed by other regional economies in the short term, experts say

Their lower rates come on the back of weak oil prices, which have eased inflation concerns, and fears over the US-China trade war

4-MIN READ4-MIN

India has cut interest rates by a cumulative 110 basis points this year as it struggles to stem an economic slowdown. Photo: AFP

Published: 9:40pm, 7 Aug 2019Updated: 4:12pm, 8 Aug 2019

Increasing fears of a protracted US-China trade war, and anaemic oil prices – which ease inflation concerns – are pushing Asia-Pacific countries towards a fresh wave of monetary easing, analysts said on Wednesday after three regional central banks surprised markets with aggressive interest rate cuts.

The moves by New Zealand, Thailand and India are likely to be followed by several other economies in the short term, with regional economist Rajiv Biswas suggesting the Philippines, South Korea, Australia and Indonesia are all showing signs of a “dovish bias” as the global economy slows to a crawl due to the trade tensions.

The Philippine central bank is expected to announce a fresh rate cut on Thursday.

Some of these countries had been eyeing a tighter monetary policy earlier in the year, but the drag on their latest GDP figures arising from the superpowers’ tariff battle has seen them change tack.

The United States Federal Reserve’s first rate cut in 10 and a half years last week – when it slashed its benchmark interest rate by 25 basis points – offered regional central bankers the strongest cue yet that an ultra-easy monetary policy is the way to jump-start growth.

There are some expectations that the Fed will further cut rates in September.

Indonesia’s deputy central bank governor Destry Damayanti said on Wednesday she expected easing measures to “last quite long” to stimulate long term economic growth.