Articles
18 September 2020

Asia week ahead: Nothing as boring as central bank meetings these days

There was nothing exciting about the three Asian central bank meetings this week, and we think the same goes for the three meetings in China, Thailand and New Zealand next week. Instead, markets will be guided by hard economic data

Nothing as boring as central bank meetings these days

With the Federal Reserve going into policy inactivity territory for the next three years, there will be no motive whatsoever for Asian central banks to change their policies either. As such, there was nothing exciting about the three regional central bank meetings this week in Japan, Taiwan or Indonesia. And, we think it will be the same case for the next three meetings in China, Thailand and New Zealand next week.

The People’s Bank of China has held the 1-year and 5-year loan prime rates at their current levels - 3.85% and 4.65% respectively, since April. The last 25 basis point cut in the Reserve Bank of New Zealand’s cash rate was in March and for the Bank of Thailand, that occurred in May, bringing rates down to their all-time lows of 0.25% to 0.50% respectively.

While we anticipate all three central banks keeping rates on hold next week, New Zealand’s 12% 2Q20 GDP contraction - the sharpest fall in developed markets, may raise some interest in the RBNZ meeting as the speculation about negative interest rates is on the rise there.

And a busy data week

Inflation, trade, and manufacturing releases pack the Asian economic data calendar next week.

Korea reports PPI inflation for August and Hong Kong, Malaysia and Singapore will release CPI inflation data – all likely to be showing continued negative inflation.

Hong Kong and Thailand will release trade data. We expect export growth to stay in the negative territory. Taiwan’s export orders figures will indicate where growth is headed over the coming months.

Lastly, industrial production numbers from Taiwan and Singapore, combined with July readings, will shed light on their third-quarter GDP performance. Indeed, firmer exports are supporting manufacturing, and therefore GDP growth.

Asia Economic Calendar

 - Source: ING, Bloomberg, *GMT
Source: ING, Bloomberg, *GMT

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