JAKARTA (BLOOMBERG) – Indonesia is on track to join the Philippines in a new monetary-easing cycle as a darkening global outlook forces Asia’s most aggressive interest-rate hikers of recent times to reverse course.

While Bank Indonesia is widely expected to leave its benchmark rate unchanged on Thursday (June 20), the central bank has offered its strongest signal yet that cuts are on the horizon. Bangko Sentral ng Pilipinas, which pulled the trigger with a quarter-point reduction in May, is seen moving again on the same day.

Indonesia and the Philippines each hiked interest rates by 175 basis points last year, which helped their currencies rebound and kept inflation in check amid an emerging-market rout. But in 2019 the story has changed: waning global demand, a worsening US-China trade war and a cautious Federal Reserve is making Asian central banks from India to Australia shift toward looser monetary policy to bolster economic growth.

“Both central banks have a clear easing bias,” said Krystal Tan, an economist at Australia & New Zealand Banking Group in Singapore. They “hiked aggressively last year mainly due to a hawkish Fed in the case of Indonesia and high inflation in the Philippines, but both factors have since dissipated, giving them scope to unwind the earlier hikes to support growth.”

While Philippine inflation quickened last month, it remains within a 2-4 per cent target and had been slowing since October. But with disappointing economic growth in the first quarter, Bangko Sentral Governor Benjamin Diokno may further step on the monetary easing gas. A survey by Bloomberg shows 16 of 24 economists predict a 25-basis-point cut to 4.25 per cent on Thursday.

“Inflation remains on a downtrend and growth is still hampered by the lingering effects of the delayed passage of the budget,” said Eugenia Victorino, Asia strategist at Skandinaviska Enskilda Banken AB in Singapore, who’s among those forecasting a cut. A gloomy global outlook also presents “risk of further easing down the road,” she said.

Bank Indonesia Governor Perry Warjiyo this week said there’s room to ease monetary policy, after earlier warning that South-east Asia’s biggest economy will probably grow below the midpoint of a 5-5.4 per cent forecast this year. But the risk of global uncertainty once again rattling financial markets and spurring capital outflows is complicating his decision.

Only six of 34 economists in a Bloomberg survey, which started before Warjiyo made his comments this week, see a lowering of the benchmark rate to 5.75 per cent on Thursday, with the rest predicting a hold. A surprise cut would be Indonesia’s first since September 2017.

“The time is right for BI to switch gears,” said Rahul Bajoria, a senior economist at Barclays in Singapore, who expects a reduction. “We do not see Indonesia’s stability as being jeopardized with a small rate cutting cycle, rather it will help balance growth risks.”