Asia week ahead: Central bankers get busy
South Korea, Indonesia and New Zealand's central bank hold policy meetings next week,alongside data shedding light on Asia’s growth-inflation dynamic
Three central bank meetings
Central banks of South Korea, Indonesia and New Zealand meet next week. We share the market consensus of all three leaving their current policy settings unchanged.
Although inflation has started to accelerate, the threat from Covid-19 is far from over. Central bank policies around the region remain focused on supporting growth rather than curbing inflation given that the latter is pretty much a transitory phenomenon, which likely warrants policy status quo throughout the year.
Yes, the increasing noise about the timing of tapering from the Federal Reserve may get Asian central bankers thinking about eventual dialling down of policy support, though that’s not something we foresee happening in Asia at least until 2022.
And lots of activity data for April
In the barrage of economic data for April, industrial production and trade releases standouts as they shed light on GDP growth coming into 2Q20. The recovery from last year’s record slump is taking place. However, it’s nothing more than the base effects flattering the year-on-year activity growth while the pandemic continues to weigh down underlying recovery in demand.
There are also a couple of price indicators on the way to reinforce the accelerating inflation trend. However, as noted earlier, this is just a passing phase, driven by the base effects rather than any demand-pull pressure on inflation. The forward-looking data on consumer and business confidences will inform where these growth and inflation trends are headed.
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Download article21 May 2021
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