Asia Pacific Markets
The main focus this week in the Asia Pacific region will be central bank decisions from Japan, China and Taiwan.
The Bank of Japan is not expected to take action at Wednesday’s meeting, though Governor Ueda might hint at future plans without specifying timing or scale.
With inflation likely to exceed the BoJ’s forecast and strong wage growth expected, rate hikes could resume in May. February’s consumer price index, out Friday, may show inflation easing to 3.5% from January’s 4%, thanks to energy subsidies and stable food prices.
Despite tariff uncertainties, Japanese exports likely grew in February due to last year’s low numbers and early shipments of cars and IT goods.
China will release its first ‘data dump’ for 2025 on Monday, covering the year’s first two months.
Retail sales are expected to grow modestly by 4% year-on-year, with trade-in programs likely boosting future growth. Industrial production may ease to 5.2% due to weaker global demand, while fixed-asset investment is predicted to stay sluggish at 3.6%, dragged down by the private sector.
Loan prime rates, out Thursday, are expected to stay unchanged unless the central bank cuts its reverse repo rate soon.
Europe + UK + US
In developed markets, the US and UK interest rate decisions will take center stage.
The Federal Reserve is expected to keep interest rates steady for the second meeting in a row after 100bp cuts in late 2024. While growth has slowed, job gains and high inflation mean no immediate need for more support.
However, risks from government austerity and tariffs could change this later. For now, rate changes are unlikely until September in my opinion as the Fed gauges the impact of incoming policy. The Fed will also release updated forecasts, but no major adjustments are expected, with two 25bp cuts still projected for this year.
The Bank of England meeting will take place on Thursday with no rate cut expected as the BoE typically cuts rates once a quarter, with the next move planned for May after February’s cut. The key question is how many officials might vote for faster cuts. A 6-3 vote to keep rates steady is expected.
We do also have retail sales data from the US and the UK job report which may be overshadowed by general market sentiment and tariff developments.
