Asia week ahead: Central bank decisions and several data reports from China

(MENAFN- ING) Bank of Korea will hold rate decision meeting without its governor

Bank of Korea (BoK) will meet on 14 April for its rate decision meeting. Given governor-nominee Rhee Chang-yong's parliamentary hearing scheduled for 19 April, the Monetary Policy Committee (MPC) will be held for the first time in the absence of a governor. Indeed, the absence of a governor makes it even more difficult to predict BoK's decision-making in a situation where inflationary pressures rise and concerns about the future growth outlook grow.

However, the Korean economy has shown its resilience so far with solid exports and continued recovery in consumer activities despite all the headwinds. After the 4.1% March CPI release, the BoK noted that inflation would stay above 4% for a while, and both incoming and outgoing governments have declared inflation as one of the top priorities to tackle. Also, after checking the March Federal Open Market Committee meeting minutes, very clear guidance from the US Federal Reserve could erase one element of uncertainty for BoK.

It's a close call, but we predict a rate hike will occur in April, rather than May. Nevertheless, the question remains as to whether BoK is enterprising enough to make such an important decision in the absence of the governor. It is only because holding MPC without a governor itself is unprecedented. However, we think BoK will make a data-dependent decision rather than waiting for a new governor to come on board. If not, a couple of dissenting votes next week, then a rate hike will follow in May.

Next week also features a central bank decision from China and we expect the policy rate, the 1-year medium-term lending facility, to be cut by 10 bps to 2.75%.

China reports trade, credit and inflation figures

Trade data in March should reflect the beginning of the impact on export activities from the current Covid lockdown. We expect slower growth for both exports and imports on a yearly basis.

China will also release its credit data and we expect a stronger growth of credit in March compared to a month ago, which was a long holiday. Meanwhile, inflation data will be published on 11 April and will likely reflect a mild inflation environment even as Covid has pushed up food prices in some cities. PPI inflation, on the other hand, will continue to be high but should edge down following the global oil price.

The rest of the field

Korean March Labour data will be released on 13 April and we expect the unemployment rate to rise to 3.4%. The previous month's strong gain in employment was driven by temporary factors related to the pandemic. Also, usually in March, college graduates actively seek job opportunities, thus labour participants rise faster than the actual hiring.

Indonesia reports retail sales on 11 April which will likely sustain recent gains. We do expect some moderation however from the previous month's growth as faster inflation and a spike in Covid daily infections weighed on sales for the period. 

Lastly, we also have first quarter GDP for Singapore which will likely hit 3.6% as growth also moderates from the previous quarter, given quickening inflation pressures.

Asia Economic Calendar


Refinitiv, ING, *GMT

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