Will the FED hold? Asia ready for new easing cycle

HONG KONG - The arguments are there for additional interest rate cuts in Asia, but the elephant in the room is, of course, the FED. Rate cuts can only be possible if the FED continues with its cool behaviour, says global asset manager, Nataxis, in a new research report.

“A sudden aggressive move (particularly regarding the amount needed to complete monetary policy normaliszation) could unravel an even faster depreciation of Asian currencies and, perhaps, even a wave of defensive hikes, at least in the most fragile countries such as Malaysia and Indonesia,” Nataxis says.

“The FED’s body language makes us believe that such a scenario is very unlikely, which again opens the door for a potential wave of rate cuts, which can only do well to a waning Asian economy.”  www.nataxis.com (ATI).