U.S. rate hike to slightly affect Asia's monetary easing

A recent U.S. interest rate hike is expected to have a limited impact on ongoing monetary easing measures being pursued by Asian countries, financial analysts said Sunday.
  

Analysts from Barclays, HSBC and Bloomberg, as well as local market watchers, said that while last week's move by the Federal Open Market Committee to raise the target range of the federal fund rate from 0-0.25 percent to 0.25-0.50 percent has reverberated in places like the Middle East, Africa and Latin America, it has not caused many Asian countries to follow suit.
  

Non-Asian emerging economies are taking the measures as the rise in U.S. rates can lead to an outflow of funds from emerging markets, which can serious affect their respective economies.
  

They pointed out that many Asian countries are expected to keep their key rates unchanged or even further mark down rates in a bid to stimulate growth.
  

Taiwan on Thursday lowered rates by 0.125 percent to 1.625 percent, the second time the island economy has opted to mark down rates this year.
  

Vietnam, another important player in the region, did not lower rates, but it did adjust the interest rate for dollar-based bank accounts from 0.25 percent to zero, while Indonesia's central bank, which froze its rate this month, hinted it might cut the rate in January depending on economic conditions.
  

Financial sector observers said that such measures reflect the slowdown of China as a regional growth engine.
  

The International Monetary Fund said in October that China's growth will fall to 6.8 percent in 2015 from 7.3 percent in 2014, with numbers to fall to 6.3 percent in the new year.
  

Reflecting this, China's central bank has alluded to the possibility of keeping the yuan weak to fuel exports and effectively allow more money to flow into its market.
  

The Bank of Japan also made clear that it plans to maintain its quantitative easing program in the face of under-1 percent growth.
  

"These measures are not exactly like the lowering of interest rates, but they send a clear sign the world's No. 2 and No. 3 economies will maintain their present stances on monetary policies," an expert said.
  

He said that while Beijing had followed Washington's lead in raising rates a decade ago, the situation is different right now.
  

Other economists said that countries such as South Korea, India and China will actually lower rates in early 2016 as they try to cope with slower growth and weak exports.
  

South Korea's finance ministry recently lowered 2015 growth rates to 2.7 percent for 2015 and 3.1 percent for next year. Both are lower than 3.3 percent growth achieved in 2014.
  

"There may be growing pressure in the new year for South Korea to lower its rate, as Taiwan has already done so, and Japan is showing signs of taking this path," said Kim Tae-hun, a researcher at KDB Daewoo Securities Co.
  

Seoul has lowered its rate four times since August 2014, and the rate currently stands at a record low of 1.5 percent.
  

Reflecting these predictions, a poll conducted on 25 analysts at Bloomberg showed seven believed the Bank of Korea will lower rates in the first quarter, with 32 percent saying the rate will be reduced before the end of June.  (Yonhap)