Fed Isn't Kicking Off Global Tightening, Kuroda and Lowe Signal

Haruhiko Kuroda

Photographer: Akio Kon/Bloomberg

As the Federal Reserve exits its crisis-era policy a decade after the onset of the Great Recession, Asia-Pacific central banks are in no hurry to follow.

Speaking shortly after the Bank of Japan’s policy board decided to stay the course with its massive stimulus program, Governor Haruhiko Kuroda told reporters: "We don’t have to raise interest rates just because they’re going up elsewhere overseas."

It was a similar message Down Under: "A rise in global interest rates has no automatic implications for us," said Philip Lowe, governor of the Reserve Bank of Australia, who has kept rates at a record low for more than a year.

Both the Aussie dollar and the yen weakened.

The comments underscore the divergence between the Fed and its Asia-Pacific peers. Inflation remains subdued, meaning central banks are under no pressure to hike. That’s a break from past cycles, when a move in Washington meant Asia often had to fall into line.

— With assistance by Michael Heath, and Connor Cislo

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