- FOMC to go ahead with a rate cut and bring down Fed Funds rate to 3.75%.
- BSP to cut for the fifth consecutive meeting.
- China and Taiwan November trade data to show resilient global demand.
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Central bank meetings
Philippines’ central bank BSP (11 December): After an unexpected cut at the last rate review, we expect a fifth consecutive rate reduction by the BSP in December. Within target inflation will provide the central bank room to shift focus to the weakening growth outlook due to the corruption scandal and resultant depressed sentiments. We expect a 25bp cut in the reverse repurchase rate (RRP) to 4.5%, accompanied by dovish commentary. BSP Governor Remolona had guided markets towards the likelihood of further easing but emphasized that this will be done in ‘baby steps’, which suggests that bunched up moves are unlikely. Our base case is for 50bp more cuts next year to the neutral rate of 4%.
Forthcoming data releases
China: Exports growth is expected to turn positive from -1.1%yoy in October to 4.9%yoy in November, driven by resilient demand in Chinese electronic goods. Shipping activity has also been strengthened, with container ship deadweight tonnage at 20 major ports increasing from a daily average of 1.45mn tons in October to 1.66mn tons in November. The new export orders sub-PMI improves in line with the uptick in the official manufacturing PMI. Imports are expected to grow 2%yoy in November, following a 1%yoy increase in October.
Factory-gate and consumer prices should continue to improve as the anti-involution campaign reduces excessive price competition. CPI inflation is projected to accelerate from 0.2%yoy in October to 0.3%yoy in November. The manufacturing sub-PMI for raw-material purchasing prices and the services sub-PMI for sales prices has risen to 18-month and 19-month highs, respectively. On the monetary front, credit demand remains weak. Outstanding loan growth has stayed at a two-decade low of 6.5%yoy. Both new corporate and household medium- to long-term loans are expected to decline amid cautious borrowing sentiment and ongoing early repayments.
Malaysia: Malaysia’s industrial production (IP) growth, which picked up since mid-year, likely extended into October, reaching 6.3% yoy from 5.7% yoy in September. The strength was due to robust mining activity, and was also driven by supportive export-oriented manufacturing expansion. Factory growth remained bolstered by solid electrical & electronics shipments (which accelerated to 26.5% yoy in October from 19.5% yoy in September), buoyed by positive artificial intelligence-related spillovers and US tariff exemptions on electronics goods.
Taiwan: November trade data are due this week, with exports expected to maintain a strong 40% yoy expansion following October’s 49.7% surge. AI-related demand for GPUs, graphics cards, and servers—alongside year-end seasonal demand for new consumer electronics—is likely to continue supporting export momentum. Shipments to the US should remain resilient, aided by the delay in semiconductor tariffs. However, non-tech traditional industries will likely continue to face challenges. The 20% US reciprocal tariff on Taiwan—higher than that applied to Japan and South Korea—keeps Taiwanese manufacturers in these sectors at a competitive disadvantage. In addition, China’s subdued domestic demand and excess manufacturing capacity are expected to keep weighing on Taiwanese exporters exposed to the Chinese market.
India: We expect November CPI inflation to stay below 1.0% yoy for a second consecutive month, registering 0.6% yoy rise compared to 0.25% in October. Perishable food costs are off lows and inching up on sequential basis, though are still benign on annual terms. Base effects remain favourable, besides broader food disinflation. Core inflation, by contrast, is likely to stay above 4%, as has been the case for much part of this year. We are tracking average 1.8% yoy in FY26 yet far, undershooting the central bank’s target range (2% to 6%). The new revised and rebased CPI inflation series will be released in February 2026, which is likely to assign lower weightage to food and higher to non-food, besides better reflecting e-commerce/ platform services data.
Economics Team
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