ASEAN Central Banks Signal Coordinated Rate Cuts as Regional Inflation Cools

Central banks across Southeast Asia are moving toward a coordinated easing cycle after inflation across the region fell to a three-year low in March 2026, opening space for rate cuts that policymakers hope will reinvigorate domestic consumption without reigniting price pressures.

Bank Indonesia cut its benchmark rate by 25 basis points to 5.5% last week, the first reduction since 2023, citing easing food prices and a stable rupiah. The Bank of Thailand is widely expected to follow at its May meeting, while the Bangko Sentral ng Pilipinas has signaled it is monitoring conditions closely ahead of a potential cut in June.

Vietnam's State Bank has taken a more cautious stance, keeping its refinancing rate at 4.5% despite calls from the business community for cheaper credit. Governor Nguyen Thi Hong noted that while headline inflation has moderated, core inflation — which strips out food and energy — remains sticky at 3.6%, leaving limited room to ease without risking a rebound.

The divergence reflects different structural pressures across the region. Countries with larger commodity import bills, like the Philippines and Indonesia, have benefited most from the global commodity price correction. Vietnam, by contrast, faces domestic supply constraints in the pork and rice markets that are keeping food prices elevated.

Analysts at Maybank and HSBC both project that the ASEAN easing cycle will be shallower than the 2019–2020 cycle, with most central banks cutting no more than 75 basis points in total through end-2026. The key risk, they note, is a resurgence in US dollar strength that could force a reversal before the cycle completes.