Asian Policy Makers Shrug at Fed Delay in Rate-Rise Liftoff

  • MSCI Asia Pacific Index rises 0.3%, reflecting subdued reax
  • Indonesia's central bank says Fed might not even move in 2016

India’s central bank governor said he was focused on his own monetary policy, not the Federal Reserve’s. Japan said the Fed made the right move in holding off on raising interest rates. The Bank of Thailand noted little impact on financial markets.

All in all, Asian officials had limited reaction to what was one of the most keenly observed Fed decisions in recent years. The MSCI Asia Pacific Index of stocks reflected the mood, ticking up 0.3 percent by 5:20 p.m. Tokyo time.

“What we’ll have to do is continue doing what we are doing -- which was anyway the intention regardless of the Fed decision,” Reserve Bank of India Governor Raghuram Rajan told reporters at a conference in Mumbai.

Others considered that a delay in the first Fed rate increase could be helpful. Thai Finance Minister Apisak Tantivorawong said it makes it easier for his country’s central bank to maintain an accommodative monetary policy stance. Higher Fed rates could raise the risk of capital flows out of emerging economies.

Japanese Finance Minister Taro Aso said that emerging-market members of the Group of 20 had expressed concern at their most recent gathering about any move by the Fed to boost borrowing costs. That may have influenced the U.S. decision, he told reporters in Tokyo. Japan’s economy minister and chief cabinet secretary separately said the Fed acted appropriately.

China Concerns

The central bank governor of Indonesia, Southeast Asia’s largest economy, opined that his U.S. counterpart Janet Yellen was unlikely to oversee a rate rise this year. The Federal Open Market Committee’s statement was quite dovish, and the Fed panel may not even raise its benchmark next year, Governor Agus Martowardojo told reporters in Jakarta.

For her part, Yellen said in the post-decision press briefing that the committee still did anticipate lifting the main rate by year-end. She also said that emerging market concerns, particularly with regard to China, had influenced the decision on Thursday.

South Korean officials used their typical language when addressing overseas developments -- the central bank said it would closely monitor Fed policy.

Governor Amando Tetangco said his Bangko Sentral ng Pilipinas would also be keeping an eye on how markets digested the Fed call. The Philippines would also monitor the impact of portfolio flows on domestic liquidity and evaluate new inflation forecasts “to see if there is need to fine tune policy levers or communication,” he said in a mobile-phone message.