Asia’s Triple Rate Cuts Send a Call to Action

(Bloomberg Opinion) -- Get on with it. And if you want to stand out in these times, offer a surprise to boot.  

That's the message from three very different central banks in a trio of equally divergent Asian economies. Officials in India, New Zealand and Thailand all cut interest rates Wednesday. Each defied consensus in its own way: the first two with the magnitude of reductions, the third by cutting at all.

These shifts speak volumes about how fast and how far the global economic landscape has moved in recent weeks. The changes seem to have accelerated still more in the past couple of days. Deteriorating global confidence, trade conflict and prospective currency wars all spell the need for action. And to stand out from the pack.

I applaud the initiative, but wonder where it's headed. Wait too long to get going, and you may be forced into more drastic steps later. Move too fast and misread the economy, and you may be forced into an embarrassing retreat. Monetary mandarins appear to have decided the former is the lesser of two evils. Good luck to them.

The spree began in New Zealand where a mere quarter-point reduction was in the cards. The Kiwis sprang a half-point move to 1% and shockingly, in a nation that prides itself on standing apart from the world's ills, countenanced the prospect of negative rates. That was supposed to be a northern hemisphere affliction. Japanification is becoming everyone’s problem.

The path to lower Indian borrowing costs has been well-trodden this year. The Reserve Bank of India was the first monetary authority of any significance to cut in 2019, not waiting for the Federal Reserve and stunning economists with a clip in February. Two more followed and the Indian government made it known last week that the more cuts, the better. Governor Shaktikanta Das must have thought it was time to shake up observers' complacency and have a little fun. He did so by delivering a quirky 35-basis-point cut in his fourth outing. Finance Minister Nirmala Sitharaman is unlikely to complain. 

The Bank of Thailand had been a laggard until today. While pretty much every central bank around it had cut through the course of the year, Thailand consistently demurred. Economists may have been lulled into a sense of complacency or, worse, fatalism. Either way, only a minority saw this coming.

As dramatic as the day seemed within Asia, the surprises have been about degree, rather than kind. It's important to keep some perspective. But in an environment where little now seems out of bounds, officials decided there was no cost in jolting expectations. There's no sense these three moves were coordinated, but the three institutions are looking at the same things: global risks, brittle confidence and inflation that's yesterday’s problem.  

Looking at gross domestic product and consumer price numbers seems almost quaint, doesn't it?

To contact the editor responsible for this story: Matthew Brooker at mbrooker1@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Daniel Moss is a Bloomberg Opinion columnist covering Asian economies. Previously he was executive editor of Bloomberg News for global economics, and has led teams in Asia, Europe and North America.

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