IMF Highlights Asia's Monetary Strategy Amid U.S. Tariff Turmoil

The International Monetary Fund suggests Asian central banks can ease monetary policy to counter U.S. tariffs' impact. Asia's growth forecasts are down, with economic uncertainty due to Trump's tariffs. Low inflation allows maneuvering room, though regional vulnerability to trade shocks and financial volatility remain significant risks.

In response to newly levied U.S. tariffs, Asian central banks have an opportunity to adjust monetary policy, suggested a senior official from the International Monetary Fund (IMF) on Thursday. The IMF has consequently lowered its GDP projections for this predominantly export-oriented region.

Fresh forecasts from the IMF predict Asia's economic growth will taper off, dropping to approximately 3.9% in 2025 and 4.0% in 2026. Director Krishna Srinivasan attributes this slowdown to the heightened uncertainty in global trade policies, exacerbated by U.S. President Donald Trump's recent tariff announcements.

Despite the global trade tensions, Srinivasan believes there is latitude for monetary policy easing due to relatively stable inflation rates. However, the potential shock to capital flows and investments, alongside vulnerabilities linked to open trade economies, present lingering threats to the region's economic stability.

(With inputs from agencies.)