Asia-Pacific Economies Gird for Turbulence
Asia-Pacific authorities braced for financial turbulence out of crisis-stricken Europe, with Indonesia's central bank slashing interest rates and New Zealand putting off plans to tighten bank capital rules as stock markets and currencies in the region fell sharply.</br></br>Officials from Australia warned about the potential damage from Europe's debt crisis, which intensified as Italy's bond yields soared to levels that have pushed other euro-zone countries to accept bailouts.</br></br>The deepening crisis and continued sluggishness in the U.S. economy pose a major threat to the still-robust Asia-Pacific region, where exporters depend heavily on demand from more-developed economies.</br></br>"There's not an economy here that hasn't felt the chill wind of events in Europe and the U.S.," said Australia's Deputy Prime Minister Wayne Swan at a meeting of the Asia-Pacific Economic Cooperation forum in Hawaii.</br></br>Bank Indonesia surprised markets by cutting its key rate half a percentage point, moving aggressively to shield Southeast Asia's biggest economy from the increasingly hostile external environment. The rate, now at 6%, is the lowest since it was introduced in 2005, underscoring the central bank's focus on supporting economic growth while taming inflation.