The U.S. Fed held its policy rate steady at the June 19 Federal Open Market Committee (FOMC) meeting, observing that economic activity is still “rising at a moderate rate.” However, it opened the door for a rate cut before the end of the year. The FOMC also noted that it would continue to closely monitor economic conditions relative to its employment objective.
In the Euro Area, the European Central Bank (ECB) revised down its economic projections at the latest Governing Council Meeting. At the G20 Meeting in Fukuoka, the ECB policymakers indicated that they would be prepared to cut the policy rate if growth were to weaken. The accommodative tone adopted by the two major central banks improved global market sentiment. In the United Kingdom, the continuing uncertainty over Brexit is contributing to an already weak growth outlook.
In the ASEAN+3 region, AMRO staff have revised growth projections downward amid the renewed U.S.-China trade tensions and sharply weaker regional exports. In financial markets, regional emerging markets continue to see positive net capital inflows, while regional equity markets have rebounded in tandem with global markets. However, despite the Fed’s dovish stance, most regional currencies have depreciated on the back of concerns over the escalating trade tensions and the recent addition of several Asian countries to the U.S. currency manipulation watchlist.
The Monthly Update of the ASEAN+3 Regional Economic Outlook (AREO) provides regular, short updates on regional economic developments, to supplement the annual AREO published in May each year. The Updates are published eight times a year, with the April and May editions incorporated into the annual AREO published in May, and the November and December editions into next year’s January Update (Special Edition).