New Zealand, India and Thailand all announce larger-than-expected cuts to interest rates

via CNBC:

  • The main takeaway from the raft of monetary policy easing points to central banks signaling major concerns about the outlook for economic growth, and resorting to sharp monetary policy action in order to stave off a downturn.

  • The latest round of rate cuts, along with the trade war uncertainty, has seen investors rush to safer assets such as government bonds and gold.

Central banks in New Zealand, India and Thailand all announced larger-than-expected cuts to interest rates on Wednesday, furthering a global trend of monetary policy easing.

The Reserve Bank of India cut rates by 35 basis points for a fourth straight meeting this year, while the Bank of Thailand unexpectedly cut its rate by 25 basis points for the first time since 2015.

The Reserve Bank of New Zealand (RBNZ) stunned markets with a 50 basis point cut, twice the expected level, to take its official cash rate to an all-time low of 1%. The Reserve Bank of Australia, meanwhile, held rates at a record low following cuts in June and July.

The main takeaway from the raft of monetary policy easing points to central banks signaling major concerns about the outlook for economic growth, and resorting to sharp monetary policy action in order to stave off a downturn. Central banks often resort to lower interest rates in environments like this in order to boost money supply in the economy, stoke demand and provide an impetus to growth.

Rabbani Wahhab, senior fixed income portfolio manager at London & Capital, told CNBC on Wednesday that the timing and size of the rate cuts from New Zealand, Thailand and India sends out a clear message to their respective economies and the rest of the world.