(Bloomberg) -- Southeast Asian central banks signaled strong policy action this week to counter a hit to their economies from the new coronavirus.
The Bank of Thailand cut its benchmark interest rate Wednesday to a record-low 1%, while Singapore policy makers indicated there was room for further easing in the currency.
The Philippines underscored its willingness to ease, with Governor Benjamin Diokno saying in an interview that it’s preferable to cut interest rates “the sooner the better” to curb the virus impact. Seventeen of 25 economists surveyed by Bloomberg expect the Philippine central bank to cut its benchmark interest rate Thursday afternoon.
The dovish comments fueled currency losses across the region. The Singapore dollar dropped the most in Asia on Wednesday after the MAS comments, tumbling as much as 0.9% to a four-month low. On Thursday, a day after Thailand’s rate cut, the baht was the biggest decliner, down as much as 0.7%.
“We needed a preemptive move. We didn’t want to act too late,” Bank of Thailand Governor Veerathai Santiprabhob said in a speech Thursday morning. “We still have policy space for any future unexpected event.”
Already poised for policy easing given trade and global demand pressures, the region’s central bankers now have an additional concern as the number of confirmed cases and deaths linked to the coronavirus continues rising. The epidemic already has damaged the critical tourism industry and disrupted tightly linked supply chains, especially as factory closures in China extend beyond the Lunar New Year holiday.
Read More: Virus ‘Wildcard’ Threatens to Drag Central Banks Into Action
This year’s round of easing in Southeast Asia began Jan. 22, when Malaysia surprised with an interest-rate cut, citing broad worries about the economic growth outlook. After Thursday’s decision in the Philippines, next up is Bank Indonesia, which is set to meet Feb. 20.
Bank Indonesia Governor Perry Warjiyo said Wednesday the central bank will keep policy accommodative this year, adding that the benchmark interest rate isn’t the only tool officials will use.
(Updates with BSP survey in third paragraph, Bank of Thailand governor comments in fifth paragraph.)
