Oxford Economics said most central banks across emerging Asia are under pressure to cut policy rates to boost growth. “But so far, there has been little action apart from a recent move in Indonesia,” it said.
Instead of a rate cut on April 24, Bank Indonesia raised its policy rate by 25 basis points to 6.25 percent. “This shows that central banks in the region have different concerns when considering whether to loosen monetary policy,” Oxford Economics said.
It said that as inflation is under control for most emerging Asian countries, the main task for central banks in the region comes down to balancing the trade-off between boosting growth and absorbing external pressure on their currencies.
“Beyond the obvious considerations for central banks – growth, currencies, and inflation – other important factors in determining monetary policy include the timing and the magnitude of anticipated US rate cuts; upside risks to inflation from elevated oil prices; and the impact of a flight to safety due to geopolitical tensions,” it said.
