Goldman Sachs: The strong dollar combined with Trump's tariff threats slows the pace of interest rate cuts by Asian central banks

According to the Zhitong Finance APP, Goldman Sachs pointed out that due to the strengthening of the US dollar and the risks brought by the Trump administration's tariff policies, Asian central banks will take a cautious approach to further easing policies. Wall Street banks expect the Bank of Korea will not cut interest rates this week, and Indonesian officials have also warned that the space for rate cuts is limited due to developments in US politics.

Specifically, Andrew Tilton, Chief Economist for Asia Pacific at Goldman Sachs, stated that considering the imminent implementation of tariff policies and the US dollar exchange rate being close to decades-high levels, the pace of interest rate cuts by Asian central banks will slow down.

He believes that the US dollar exchange rate is crucial for Asian central banks, as the exchange rate and its stability have a significant impact on central bank decision-making.

Last week, Indonesian officials issued a warning that the space for lowering borrowing costs will be reduced due to political developments in the US.

In addition, there are reports that US President-elect Donald Trump has proposed the possibility of imposing high tariffs on China and has appointed a series of officials with a hardline stance on foreign policy, such as Secretary of State Marco Rubio and National Security Advisor Mike Waltz, reflecting a certain degree of confrontational tendency.

In this context, Tilton analyzes that Chinese policymakers may strive to maintain a relatively stable exchange rate for the renminbi under the current situation. However, if tariff measures are implemented, the renminbi exchange rate may face downward pressure in the first half of next year