MARKETS in Asia may have largely shrugged off the latest series of central bank measures that were widely expected, but the moves point to lingering fears of a global economic slowdown.
In addition, market watchers are speculating that more monetary stimulus could be in store as economies feel the bite of the US-China trade war and tepid growth.
On Thursday, the MSCI Asia ex-Japan index shed 0.51 per cent after the US Federal Reserve cut interest rates by 25 basis points overnight, in line with market expectations, while signalling that its latest rate cut was a move to insure against negative hits to the economy.
Japan's benchmark Nikkei 225 closed just 0.38 per cent higher after the Bank of Japan (BOJ) left policy unchanged at its regular policy meeting, as anticipated.
The Hang Seng index slid 1.07 per cent at the close after the Hong Kong Monetary Authority lowered the benchmark interest rate in line with the Fed. However, analysts attributed the decline mostly to the ongoing political unrest raging in the city.
Meanwhile, Indonesia's central bank also moved to cut interest rates for a third straight month, in line with consensus, while relaxing some lending rules.
"Analyst consensus for a rate cut seems consistent with market expectations as well," Citi analysts had written in a morning note. Indonesian shares ended the day 0.5 per cent lower.
Most regional markets may have barely budged but the central bank moves signal persistent economic worries globally, prompting speculation that more monetary easing could come.
FXTM market analyst Han Tan noted that US Fed chair Jerome Powell has again said that the latest policy easing measures serve as "insurance" in protecting US growth momentum and pushed back against calls for deeper rate cuts. However, "persisting US-China trade tensions, geopolitical conflicts, and cooling global growth threaten to tip Fed officials towards a more dovish stance over the coming months", especially if such downside risks continue taking their toll on the US economy, he said.
Mr Powell had also said in a news conference the same day that a "more extensive sequence" of rate cuts could be appropriate, if the economy does turn down.
Fidelity International fixed income portfolio manager Tim Foster thinks the Fed may even need new monetary policy tools as the current options prove to be "increasingly ineffective against upward pressure on money market rates".
He added: "Simple rate cuts are now rather old-fashioned compared to the European Central Bank's comprehensive and complicated package of easing measures last week."
In Asia, policymakers are also expected to continue taking their cues from the Fed, whereby more US interest rate cuts should offer added room for Asian central bankers to ease their respective policy settings further, according to FXTM's Mr Tan.
For instance, the BOJ, despite keeping monetary policy on hold this time, has hinted that it may ease monetary policy at its next meeting.
"If I am asked if I feel more favourably about additional easing compared with the previous meeting , my answer is yes," BOJ governor Haruhiko Kuroda said at a news conference. "There is no sign of recovery in overseas economies."
More rate cuts could also be on the horizon for Indonesia, where its central bank has acknowledged that the latest measure is a "pre-emptive" one to help prop up slowing economic growth momentum.
Mizuho Bank's economist Vishnu Varathan predicts another 50 to 100 basis points of rate cuts could come through into 2020 depending on growth-inflation dynamics in Indonesia, the extent of Fed easing and wider risk sentiments.
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