Asian Central Banks Navigate Steady Rate Cut Path

Asian central banks plan slower interest rate cuts compared to the U.S. Fed, supported by stable growth and manageable inflation. The Fed's significant rate reduction offers Asian banks flexibility, though they remain cautious due to a strong U.S. dollar and varying national economic conditions.

Asian central banks are set to reduce interest rates more cautiously than their U.S. counterparts over the coming year, according to recent polls by Reuters. Strong economic growth in Asia has alleviated the pressure to maintain currency stability against the U.S. dollar, which remains strong.

While the U.S. Federal Reserve is anticipated to cut rates by 125 basis points next year following a notable 50 basis point reduction in September, expectations for additional reductions are high. This movement provides some leeway for Asian economies in their monetary policy decisions.

With inflation under control and economic growth steady, most Asian central banks are not in a rush to cut rates aggressively, despite the Fed's moves. Radhika Rao, a senior economist at DBS, highlighted that weak currencies have made policymakers wary of reducing rates prematurely. The varied rate reduction strategies reflect differing economic conditions across Asia.

(With inputs from agencies.)