Rate shocks in Asia are a sign of the times

SURPRISES GETA bad press in economics, unless they are nice,and those have been scarce oflate.Astring of monetary policy upsets indicate something is seriously offin Southeast Asia.

- DANIEL MOSS

Projections that interest-rate cuts would be forthcoming in Thailand and Indonesia were wrong.A consensus that the Philippines was done with reductions was wide of the mark. Howto account for these misses? Ata bare minimum, the decisions indicate a more unsettled financial and political environment than previously assumed.

They are also a useful, if uncomfortable, reminder that turning points are tricky. And that guidance by central bankers themselves is rife with caveats. It seemeda sure thing that Bank Indonesia would avail itself of another opportunity to juice growth despite frequently commenting that itwantsa stable currency.The rupiah is the worst performer against the dollar in the region this year and trades near a record low. But that hasn’t stopped Jakarta from delivering a series of shock rate cuts over recent months. The head of the bank declared in September that he was taking an “all-out progrowth” stance. The remarks appeared to be a hearty endorsement of President Prabowo Subianto’s goal of accelerating the expansion.