South Korea, Indonesia Cut Key Rates, More Asian Policy Easing Seen

www.oann.com | 3/8/2016 | Staff
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SEOUL/JAKARTA (Reuters) – South Korea and Indonesia cut their benchmark interest rates for the first time in years on Thursday, not waiting for an expected reduction soon in U.S. rates as they aim to help borrowers cope with mounting risks to economic growth.

The Korean cut, unlike the Indonesian one, surprised economists who anticipated a move by Seoul only after a Federal Reserve’s policy decision due on July 31. And both left the door open for further easing.

Risks - Rise - Trade - War - Drags

Global risks are on the rise as the Sino-U.S. trade war drags on, dampening business confidence and deterring investment, and Asian economies are feeling additional pressure as China’s growth cools to near 30-year lows.

Both Indonesia and South Korea cut main rates by 25 basis points (bps).

Deutsche - Bank - Others - Asia - Response

Deutsche Bank said it expects others in Asia to follow, in response to tepid growth and limited inflationary pressure, adding that Bank Indonesia and the Philippine central bank could be “the most aggressive”.

Later on Thursday, another emerging market central bank – South Africa’s – is expected to trim its rates.

Spate - Rate - Decisions - Asia - August

A spate of rate decisions are due in Asia in early August. One is due from Manila’s Bangko Sentral ng Pilipinas, which has made one cut this year, on Aug. 8. India’s central bank, which has cut three times in 2019, meets on Aug. 7, as does the Bank of Thailand, which in December hiked for the first time since 2011.

The governors of Bank of Korea (BOK) and Bank Indonesia (BI)both said on Thursday that they see more room for “accommodative” policy, meaning that more rate cuts may be on the way.

BOK - Base - Rate - Basis - Points

The BOK cut its base rate 25 basis points (bps) to 1.50%. It also shaved this year’s growth forecast to 2.2%, the lowest in a decade, from 2.5%, as a brewing dispute with Japan piled more pressure on the...
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