Asia week ahead: Rate decision in the Philippines and data on Taiwan and China

The Bangko Sentral ng Pilipinas' (BSP) monetary policy decision on Thursday will be challenging amid risks of rising food inflation over the next few months due to the impact of typhoons on the food supply. Moreover, the recent depreciation in the Philippine peso (PHP) against the USD is likely to have the BSP treading even more carefully. While we have a 25 bp rate cut in our fourth-quarter forecast profile, risks on the horizon lead us to believe the BSP will likely delay acting until December, keeping the policy rate unchanged at 5% this week.

Taiwan will publish its latest inflation and trade data. We expect inflation to edge up slightly to 1.7% year-on-year in September, up from 1.6% YoY in August. Price pressures have cooled this year and are likely to remain within the 2% target level for the remainder of 2025. This keeps the door open for a December rate cut if data deteriorates. Currently, though, we look for the central bank to remain on hold in December even with the Federal Reserve cutting rates. One reason: trade has held up quite well year-to-date, and we expect this to continue. In September, we’re looking for a 42.3% YoY gain in exports and a 20.4% rise in imports for a trade balance of $17.4bn.

The data calendar is very light with China in the midst of the Golden Week holidays; markets are closed until next Thursday. As a result, the typical early-month publications of inflation and trade data will be pushed back a week. Instead, reports on holiday travel and consumption will likely be the main focus. It’s possible that China's aggregate financing data could be released toward the tail end of the week.