BoJ's Intervention and its impact

April 25, 2024 6:24 AM UTC

In the period of time when JPY significantly weakens or strengthens, BoJ will intervene in the FX market either through verbal or actual intervention. As JPY weakened significantly in the past months, once again we found ourselves in the proximity of FX intervention with unknowns for anonymity is ke

China: Surging Government Debt and Does It Matter?

April 24, 2024 9:30 AM UTC

Total non-financial sector debt, plus the IMF estimates of government debt/GDP, do seem to matter for the action of China authorities, as fiscal policy stimulus is targeted rather aggressive as in 2009 or 2015.  The overall debt picture also matters for the growth outlook, as the excess debt/GDP le

Indonesia: MPC Preview: Bank Indonesia to Hold Rate Despite Currency Volatility

April 23, 2024 11:12 AM UTC

With inflation within target range and the need to defend the currency amid global uncertainties and US dollar strength, Bank Indonesia (BI) is likely to extend its pause on rate adjustments in the upcoming monetary policy meeting on April 24. BI remains committed to stabilising the Indonesian rupia

Indonesian Court Delivers Verdict: Prabowo prevails

April 22, 2024 3:18 PM UTC

The Constitutional Court dismissed cases against Vice President Gibran Rakabuming Raka and President Joko Widodo. In Gibran's case, the court didn't disqualify him from running for president but sanctioned the election committee for not amending regulations following a previous ruling. This ruling l

BoJ Preview: Showing no hurry

April 22, 2024 6:13 AM UTC

Our central forecast is for the BoJ to remain on hold for interest rate and signals the market they are in no rush to further tighten while allowing trend inflation data to lead policy direction in their forward guidance. BoJ has moved interest rate to 0% and officially removed YCC in March, citing

RBI Holds Rates Firm, Citing Room for Economic Growth

April 11, 2024 5:44 AM UTC

In line with our expectations, the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) chose to maintain the policy repo rate at 6.5% in its latest meeting. The decision reflects their aim to gradually scale back stimulus measures while still supporting economic growth. It also unders

RBNZ Review: Keep Rates Restrictive

April 10, 2024 5:48 AM UTC

RBNZ kept rates unchanged at 5.5% and suggest OCR to stay restrictive for a sustained period of time

RBI to stand pat in April

April 4, 2024 7:25 AM UTC

The Reserve Bank of India (RBI) is gearing up to announce its first monetary policy decision for FY25 (April-March) on April 5. For the upcoming meeting, we anticipate that the RBI will likely keep the repo rate unchanged at 6.5%, given the optimistic outlook for economic growth and still elevated i

Indonesia CPI Review: Ramadan Demand Drives Up Inflation

April 1, 2024 1:33 PM UTC

Indonesia's latest Consumer Price Index (CPI) data has revealed a notable acceleration in inflation, surpassing expectations and marking the highest rate since August 2023. The surge, driven primarily by heightened demand during the fasting month of Ramadan, highlights significant price pressures ac

Japan: 10yr JGB Yields To Exceed 1% in 2024?

March 27, 2024 10:00 AM UTC

Though BOJ soothed markets with last Tuesday’s rate hike and scrapping of yield curve control, we see scope for 10yr JGB yields to rise through 1% by summer/autumn.  The current pace of net JGB purchases is a lot lower than H1 2023, while Ueda noted that this pace could be slowed in the future. 

Equities Outlook: Cyclical Recovery Versus Structural Headwinds

March 25, 2024 9:00 AM UTC

 ·        In the U.S., a tug of war between momentum and U.S. exceptionalism on the one side versus valuations and any deviations from the U.S. goldilocks scenario now means volatility and a risk of a correction.  We feel that the U.S. equity market recovery can push onto 5250 for the S&P5

Asia/Pacific (ex-China/Japan) Outlook: Election Spending to Drive Growth

March 22, 2024 12:18 PM UTC

·       In 2024, growth trends across emerging Asia will exhibit a mixed pattern. Encouragingly, there will be a resurgence in demand for global electronics following a period of stagnation in 2022‑23, which will provide a boost to regional trade. Moreover, the initiation of monetary policy

China Outlook: The Struggle to Hit 5% Growth

March 20, 2024 11:00 AM UTC

China’s 5% growth target will likely be tough to meet with residential property investment likely to knock 1.0-1.5% off GDP and net exports a small negative. With sluggish private investment, this means some of the old engines of growth are not firing.  Some additional fiscal stimulus will likely

BoJ Review: Zero

March 19, 2024 6:14 AM UTC

BoJ has moved interest rate to 0% and officially removed YCC. However, forward guidance suggest the BoJ is in no hurry to further tighten

Bank Indonesia to Retain Policy Rate

March 18, 2024 5:40 AM UTC

Bank Indonesia (BI) will likely maintain the key 7-day reverse repo rate unchanged in March at 6%, in line with recent trends. The stability of the rupiah remains a crucial consideration for BI, alongside CPI inflation, which has moderated within the new target band of 2.5+/-1%. 

BoJ Preview: 50-50

March 13, 2024 3:17 AM UTC

Our central forecast is for the BoJ to change forward guidance in March, indicating trend inflation will be achieving target and ultra-ease monetary policy is no longer necessary and hike interest rate to 0% in April as wage growth has accelerated and the latest wage negotiation is likely to ensure

India's Q3 GDP: Strong But Uneven Growth

March 8, 2024 2:30 PM UTC

India's economic landscape witnessed a remarkable upswing in Q3-FY24, with a real GDP growth rate of 8.4%,  surpassing both street estimates and the Reserve Bank of India's (RBI) projections. This surge not only solidifies India's position as the fastest-growing major economy globally but also unde

Bank Indonesia to Look Beyond Recent Uptick in Consumer Price Index

March 7, 2024 4:06 AM UTC

Indonesia's Consumer Price Index (CPI) data released by the Central Statistics Agency (BPS) indicates a notable uptick in inflation, reaching 2.75% y/y in February compared to 2.57% y/y in January. The three-month high inflation rate was primarily propelled by surging food prices, aligning with expe

Indonesia Preview: CPI to remain broadly stable

February 28, 2024 3:29 PM UTC

Indonesia’s February inflation is likely to remain broadly stable. Food prices will maintain upward pressures but a tight monetary stance will keep headline inflation in check. Increased demand ahead of Ramadan could see prices spike in March. 

India Elections: Political Manoeuvres Unfold

February 28, 2024 9:00 AM UTC

The Rajya Sabha (upper house) elections in India saw a mix of strategic moves, unexpected contests and the assertion of political dominance. While 41 out of 56 leaders secured their seats unopposed, the remaining 15 seats, distributed across the states of Uttar Pradesh, Himachal Pradesh and Karnatak

Farmers March to Delhi as Government Proposal Rejected Amid Election Tensions

February 26, 2024 7:35 AM UTC

In India, widespread farmer protests persist, demanding Minimum Support Prices (MSP) for all commodities, pensions and debt forgiveness. Despite multiple negotiations, the recent central government proposal to purchase specific crops at MSP for five years was vehemently rejected by protesters, promp

RBI Minutes Reveal a Cautious Committee

February 23, 2024 10:42 AM UTC

The Reserve Bank of India's (RBI) latest monetary policy decision, as reflected in the minutes of the February Monetary Policy Committee (MPC) meeting, presents a nuanced landscape of optimism about India's growth prospects, juxtaposed with concerns over inflation risks. The views of various MPC mem

Indonesia's Elections: Prabowo Subianto Emerges as Front-Runner

February 22, 2024 11:30 AM UTC

Prabowo Subianto emerges as the front-runner in Indonesia's recent national elections, securing a substantial lead of approximately 60% in preliminary sample counts, potentially avoiding a runoff and reducing political uncertainty. While his decisive victory provides him with political capital, conc

China: Yuan Outflow Fears Versus Net Exports

February 21, 2024 11:00 AM UTC

Despite a still overvalued Yuan, China authorities are reluctant to accept too much Yuan weakness for fear of causing domestic capital outflows and discontent with China’s government. At some stage, if GDP growth surprises on the downside, China authorities could decide that a controlled Yuan decl

China: 5yr LPR Cut But Not 1yr LPR

February 20, 2024 9:17 AM UTC

A larger than expected 25bps cut in the 5yr Loan Prime Rate (LPR) has been delivered, but the 1yr LPR rate was unchanged given that PBOC reluctance to cut the 1yr Medium-Term Facility rate (MTF) this month.  The 5yr LPR rate is not a game changer for residential property, as bigger policy moves are

BJP's Political Confidence Shines Through in India's FY25 Interim Budget

February 13, 2024 10:44 AM UTC

India's interim budget for FY25 presented ahead of the upcoming general election, reflects the government's commitment to economic growth, infrastructure development, and fiscal responsibility. Finance Minister Nirmala Sitharaman highlighted key aspects of the budget, emphasizing a multi-pronged app

Reserve Bank of India Review: No Rate Cut On The Horizon

February 12, 2024 6:25 AM UTC

The Reserve Bank of India's Monetary Policy Committee, led by Governor Shaktikanta Das, chose to keep the repo rate unchanged at 6.5% for the sixth consecutive time, aiming to support ongoing economic recovery while ensuring a sustained decline in inflation. Despite signs of inflation moderation and

Reserve Bank of India Preview: No Rate Cut In Near Term

January 31, 2024 11:11 PM UTC

The RBI will keep the repo rate unchanged at 6.5% during the upcoming monetary policy committee meeting on February 8th. The current tight stance is expected to persist until at least mid-2024, as the central bank foresees inflation averaging 5.4% year-on-year in FY24, ending on March 31, 2024, befo

India Rising: Upward Trajectory to Sustain

January 23, 2024 3:07 PM UTC

India's economic landscape in FY24 continues to impress with robust growth across various sectors. With a stellar GDP performance in Q2, heightened foreign investments, and impressive performance in areas like aviation and coal production, India’s growth trajectory appears to be increasing consist

BoJ Preview: Patiently waiting for spring

January 23, 2024 1:58 AM UTC

The BoJ meeting on Tuesday will likely be a non-event
Latest labor cash earning supports BoJ’s patience in waiting for spring wage negotiation for confirmation in wage growth

Japan: 10yr JGB Yields set to Rise Moderately

January 18, 2024 10:15 AM UTC

The more subdued profile of Japanese wages, plus a delay in the 1st BOJ hike, has prompted us to lower the forecast of a rise in 10yr JGB yields in 2024 – though we still see a rise above 1% (Figure 1).  As BOJ tightening stops, we see 10yr JGB yields falling back again in 2025. 

Thailand: Watching the Politics

January 17, 2024 9:00 PM UTC

Following Thailand’s elections in May 2023, the country’s political forecast appears to be marked by both challenges and promises of reform. multiracial Pakatan Harapan (PH) coalition, will find it challenging to spearhead a unity government incorporating pro-Malay factions. 

China: GDP 5.2% for 2023, but 2024 To Struggle

January 17, 2024 9:24 AM UTC

Quarterly GDP is interesting and came in at 1.0% after the 1.3% quarterly gain in Q3.  The trend in quarterly GDP (Figure 1) is also not consistent with 5% growth and the Yr/Yr will dip in Q1 2024 when the large gain in Q1 2023 drops out (due to the end of zero COVID policies).  We maintain the 4.

Malaysia: Political Tensions Remain

January 16, 2024 10:10 AM UTC

Anwar Ibrahim, leader of the multiracial Pakatan Harapan (PH) coalition, will find it challenging to spearhead a unity government incorporating pro-Malay factions. 

BoJ: The Pace of Exit

January 15, 2024 5:41 AM UTC

The BoJ has kicked the can down to the spring wage negotiation before another step in monetary policy. While current inflation forecast has exceeded BoJ's 2% target in all three items of headline, ex fresh food and ex fresh food & energy, the wage growth did not reach a "sustainable" level, which Ue

China: January MTF and March RRR Cut?

January 12, 2024 9:25 AM UTC

Figure 1: China RRR (%)Source: Datastream/Continuum Economics  
A senior PBOC official has hinted at an RRR cut on Tuesday (here), given the desire to sustain credit growth.  Similar comments were evident last July before the RRR cut in September.  We would argue that further monetary easing is l

Bank Indonesia Navigating the Path to Sustained Growth

January 5, 2024 10:17 AM UTC

Delving into the components of CPI, the December easing is attributed to a multifaceted slowdown in both food and utility prices. Disinflationary pressures from household equipment, restaurants, and personal care items contributed to the overall dip. However, information and recreation prices exerte

BoJ Review: Waiting Till Spring Wage Negotiation

December 19, 2023 9:26 AM UTC

To our surprise, not only the BoJ did not aggressively bring rates to zero percent, they did not even change their forward guidance. Given the latest inflation dynamics, it is surprising BoJ would not seize the time to hint a change of monetary policy. Yet, if BoJ only want to wait for the perfect m