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Asia: Pause in tightening in 2019? – Standard Chartered

According to analysts at Standard Chartered, with conditions tightening on a combination of rate hikes and lower inflation, their Monetary Conditions Indices (MCIs) indicate a likely pause in monetary policy tightening in 2019 across most of Asia.

Key Quotes

“Monetary conditions remain loose in India and Thailand; while we expect this to lead to further rate hikes in Thailand in 2019, we expect India to cut rates in Q1-FY20 (quarter ending June 2019) in response to lower inflation following the recent sharp oil price decline.”

“In India, we expect a 25bps rate cut in Q1-FY20 (quarter ending June 2019). We currently see Bank Indonesia hiking twice in H1-2019, but with the Fed focusing more on global growth and financial-market conditions, BI rate-hike pressure from the Fed has declined.”

“Our MCIs have been an effective leading indicator of monetary policy action, accurately identifying 10 signals of non-consensus policy easing in Asia since 2016. They have helped us to call monetary policy moves in India, Indonesia and the Philippines since 2016.”

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