While the Federal Reserve is signaling the end of its decade of unconventional monetary stimulus, the divergence between the policies of the US and Asian central banks is increasing, in contrast to a time when the regional rate closely follows the United States.
The Fed announced on Wednesday that it would begin cutting its $ 4.2 trillion in Treasury and mortgage-backed securities in October, purchased in response to the 2008 financial crisis- 2009. When the Fed initially implied this move in 2014, central banks in Indonesia and India followed rate hikes.
But Thursday, policy makers in Japan, the Philippines and Taiwan have maintained stable interest rates. Indonesia is seen exactly this Friday with some analysts who have even managed to have another chance of another cut after the surprise easing last month.
Stable current account positions in Asia mean that policy makers in the region are less concerned about the sudden capital flight than they had been before, which allowed them to focus their policies on economic fundamentals rather than on competition for global capital.
"There are many structural factors that curb inflation in the world and we see benign inflation outlook in Asia. This should keep a tone of monetary policy friendly for the markets," said Fan Cheuk Wan, Head of Investment Strategy and Advisory for Asia at HSBC Private Banking.
"We expect the Asian central banks to remain accommodative." While Asian stocks took place Thursday after the Fed meeting, there were no signs of major shocks on the financial market.
Central banks in developed markets, mostly in the West, have experienced more hawkish this year as their economies have grown. But the withdrawal of stimulus in these countries should be progressive and sensitive to economic data and market fluctuations, which would support risk appetite.
Strong growth in exports and stable currencies in Asia has attracted funds to the region 's asset markets, which means that policy – makers have not had any pressure to maintain capital on the territory by higher interest rates.
As a result, it is not expected that Asian central banks will reflect the Fed cycle as in the past. Like Indonesia, India is also perceived as a potential reduction rate in the coming months.
In Japan, the new member of the board of directors of the central bank, Goushi Kataoka, surprisingly voted against the decision to keep interest rate targets unchanged, arguing that measures of 39 current easing was not sufficient to achieve the objective of inflation. Governor of the Bank of Japan, Haruhiko Kuroda, responded by stating that increases in US interest rates did not require Japan to follow suit.
Philippine and Taiwanese central banks maintained their benchmark rates unchanged with their respective inflation projections showing no significant recovery in expected price pressures.
In Australia, central bank governor Philip Lowe said interest rates were more likely to rise than low but would remain at record levels for some time, with inflation remaining low. Lowe added that there were no "automatic consequences" of the overall rate hikes.
Markets are seeing in Australia in June.
In Indonesia, 20 of the 26 analysts polled by Reuters predicted that the central bank would hold rates at 4.50% at its policy meeting on Friday, while the other six saw another 25 basis point decline . Last month, Bank Indonesia (BI) became the second largest central bank in Asia to cut rates this year after India.
The largest economy in Southeast Asia was the only one in the region where growth in the second quarter failed to exceed expectations. Its mainly consumer-oriented economy struggled to keep pace with the boom in exports observed in neighboring countries, and its inflation shows up to the lower end of the target of 3 to 5 percent of the central bank.