Morgan Stanley Fixed-Asia Economics The Viewpoint Why Asian Central Banks Will ...-106713153

MFebruary26,202408:41PMGMTMorganStanleyAsiaLimitedIdeaAsiaEconomicsAsiaPacificChetanAhya+8522239-7812+656834-8272TheViewpoint:WhyAsianChiefAsiaEconomistCentralBanksWillNotCutChetan.Ahya@morganstanley.com+8522848-5652AheadoftheFedDerrickYKamEasinginflationhasopeneduproomforratecuts,butAsia'scentralbanksareholdingback.WethinkthisdynamicwillshiftAsiaEconomistin2H24asourUSeconomicsteamexpectstheFedtohaveDerrick.Kam@morganstanley.comstartedcuttingrates.JonathanCheungKeyTakeawaysEconomistInflationacrossAsiahasbeencomingdownandissettlingbackintocentralJonathan.Cheung@morganstanley.combanks’comfortzones.Butthelatestrhetoricfromcentralbankssuggesttheyareconsideringbutnotquitereadytocutratesyet.WeattributethismainlytotheuncertaintyinthemarketpricingofthefirstFedratecut,whichisresultinginstillrisingUSrealrates.IftheFedcutsinJuneasourUSeconomicsteamexpects,weseeAsiancentralbanksjoininginfairlyquickly.TherisksareskewedtowardsadelaytothestartoftheratecutcycleinAsia.Forimportantdisclosures,refertotheDisclosureSection,locatedattheendofthisreport.MIdeaHowtheFedinfluencesAsia’smonetarypolicyNotsosynchronizedonthewayupintimingandmagnitude:Onthewayup,centralbanksinAsiadidnothavetosynchronisetheirratehikecycleswiththeFedintermsoftimingandmagnitude.CentralbanksinAsiahadsomedegreeofindependenceaccordedtothembythefactthatdomesticc...