Following the Federal Reserve's interest rate cut in September, most global markets have entered a period of easing, with a wave of interest rate cuts beginning in emerging Asian markets!

On Wednesday, October 16th, the Bank of Thailand unexpectedly cut interest rates by 25 basis points to 2.25% in a 5-2 vote, marking Thailand's first rate cut since 2020, aimed at stimulating a weak economy; the Philippines also announced a 25 basis point rate cut to 6% today to boost the economy and address the growing risks of overseas uncertainties. Last week, the Bank of Korea cut rates by 25 basis points to 3.25%, while the Reserve Bank of India maintained its interest rates but shifted its policy stance to neutral, hinting at a possible rate cut.

After announcing the rate cut today, the Bank of Thailand revised its economic growth forecast for 2024 from the previous 2.6% to 2.7%, but lowered its economic growth forecast for 2025 from the previous 3% to 2.9%. In addition, the Bank of Thailand also revised its overall inflation forecast for 2024 from 0.6% to 0.5%, still below the target range of 1%-3%. The Central Bank of the Philippines revised its inflation forecast for 2024 from the previous 3.3% to 3.1%, but raised its inflation forecast for 2025 from 2.9% to 3.3%.

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Economists predict that both Thailand and the Philippines may cut rates by another 25 basis points in December. Thailand's economic growth lags behind its neighbors due to the impact of high household debt, high borrowing costs, and weak exports; while the Philippines' inflation is below the central bank's target range, and the economy shows signs of slowing down.

Since September 2023, Thailand's interest rates have remained at the highest level in ten years at 2.5%. After the unexpected rate cut, Thailand's benchmark stock index SET Index rose by 2.54%. The Thai baht fell to an intraday low against the US dollar, trading at 33.384 baht per US dollar.

The Philippines' rate cut this time brought the interest rate to its lowest level since February 2023. After the news was released, the Philippine Stock Exchange Index PSEi Index fell slightly. The Philippine peso fluctuated little against the US dollar.

Thailand cuts rates by 25 basis points to address high household debt, high borrowing costs, and weak exports.

As the second-largest economy in Southeast Asia, Thailand's economic growth lags behind its neighbors due to the impact of high household debt, high borrowing costs, and weak exports.

As of June this year, Thailand's total household debt was 16.3 trillion baht (approximately $488.9 billion), accounting for 89.6% of GDP, making it one of the highest ratios among Asian countries. The Bank of Thailand stated in a statement that the rate cut would help alleviate the burden of household debt and would not affect the process of reducing the ratio of household debt to GDP.

In the last quarter, the Thai baht rose by 14%, putting Thai exports at a disadvantage compared to competitors. Miguel Chanco, Chief Emerging Asia Economist at Pantheon Macroeconomics, said, "Given the rapid appreciation of the Thai baht, the rationale for a rate cut has become more compelling." Chanco also predicted that the Bank of Thailand may cut rates again in December.Just hours before the decision to cut interest rates, Thai Commerce Minister Pichai Naripthaphan was still calling for a 50 basis point rate cut this year, and the Thai Industrial Federation also reiterated its call for a 25 basis point rate cut to alleviate the financial burden on businesses.

With this rate cut, the Bank of Thailand has revised its economic growth forecast for 2024 from the previous 2.6% to 2.7%, but has revised down its economic growth forecast for 2025 from the previous 3% to 2.9%. The World Bank predicts that the Thai economy will grow by 2.4% this year and by 3% in 2025.

The Bank of Thailand also revised down its overall inflation forecast for 2024 from 0.6% to 0.5%, still below the target range of 1%-3%.

The Philippines cut interest rates for the second time this year, and may continue to cut in December.

Bank of the Philippines Governor Eli Remolona said today that the central bank's policy rate cut of 25 basis points marks the continuation of the easing cycle that began in August - in August, the Bank of the Philippines cut rates by 25 basis points, taking action ahead of the Federal Reserve.

Today's rate cut in the Philippines was expected, as inflation in the Philippines continues to ease and external uncertainties increase. Analysts believe there is still room for further rate cuts in the Philippines, and it may cut rates by another 25 basis points in December, as inflation in the Philippines is below the central bank's target range of 2%-4%, and the economy shows signs of slowing down - government data shows that the Philippines' GDP grew by 6.3% year-on-year in the second quarter, but only grew by 0.5% quarter-on-quarter.

With this rate cut, the Bank of the Philippines revised down its inflation forecast for 2024 from the previous 3.3% to 3.1%, but revised up its inflation forecast for 2025 from 2.9% to 3.3%, and revised up its inflation forecast for 2026 from 3.3% to 3.7%.

Last week, South Korea cut interest rates, and India hinted at possible rate cuts.

On October 11, the Bank of Korea (BOK) cut its benchmark interest rate by 25 basis points to 3.25%, in line with expectations, marking the first rate cut by the Bank of Korea since the pandemic in 2020. J.P. Morgan Chief South Korean Economist Park Seok Gil commented that the Bank of Korea's decision may be the beginning of a broader rate-cutting cycle. Morgan Stanley's Chief South Korean Economist Kathleen Oh predicted that after cutting rates by 25 basis points in October, the Bank of Korea will cut rates in the next three quarters, ultimately lowering the benchmark interest rate to 2.5%.

On October 9, the Reserve Bank of India (RBI) kept interest rates unchanged but relaxed its hawkish monetary policy stance, shifting to a neutral stance, marking the first change in stance by the Indian central bank since June 2019. Economists predict that the Reserve Bank of India may cut rates at its December meeting.