Why Asia’s Central Banks Can’t Pull the Trigger
Unlike their Western counterparts, they’ve got ammunition to fight the next downturn. But they're leery of using it.
She could use a hand.
Photographer: Dimas Ardian/Bloomberg
Asia’s central bankers should consider themselves lucky: Unlike their counterparts in the West — with a few exceptions — they have the scope to combat an economic downturn and low inflation through traditional tools. What they may lack, though, is the will to use those assets en masse rather than the ad hoc efforts to date.
India made a surprise down payment in February, when the Reserve Bank cut interest rates and signaled a few more steps. China has used fiscal and monetary policy. The People’s Bank of China began before the Federal Reserve even heard the words “dovish pivot”; Mario Draghi, head of the European Central Bank, was still trying to wrap up quantitative easing. That’s fitting. China’s slowdown is a big — if not the biggest — cause of global growth anxiety.