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Central bank meetings

The People’s Bank of China (January 20): The PBOC is expected to keep the 1-year Loan Prime Rate (LPR) unchanged at 3.00%, as the economy is broadly consistent with policymakers’ objectives of 5% GDP growth in 2025. While China’s GDP growth is projected to slow from 4.8%yoy in 3Q to 4.6% in 4Q, nominal GDP growth is likely to improve alongside a gradual pickup in inflation. CPI has remained in positive territory for three consecutive months, rising to 0.8% in December—its highest level since February 2023—while PPI deflation has narrowed to 1.9%. This improvement is largely driven by the anti-involution campaign aimed at curbing excessive investment and overcapacity. At the same time, the shift toward supply discipline is weighing on activity volumes. Industrial production growth is expected to ease to 4.6% yoy in December, with fixed asset investment contraction widening further. Retail sales growth is also likely to decelerate, as weak household sentiment persists amid subdued job prospects, slower income growth, and elevated precautionary savings. Looking ahead, we expect the PBOC to maintain a broadly neutral monetary policy stance. The central bank has withdrawn RMB 461bn of liquidity over the past two weeks, with R007 and DR007 repo rates stabilising in the 1.50–1.60% range. In our view, policymakers are prioritising policy flexibility to cushion against potential external shocks to growth and the renminbi.

Bank Indonesia (BI) (January 21): Base effects for inflation will be adverse in 1Q26 as local stimulus measures in the corresponding period year ago had led the quarter’s inflation to slow to 0.6% yoy. Accordingly, our forecast is for the headline to accelerate to 3.5-3.7% yoy in Jan26 (due to be released in Feb). While the central bank will retain its dovish stance at the January rate review, guidance will be cautious in midst of firm inflation, supported growth momentum and a weaker rupiah, backing a rate pause. Exogenous headwinds affecting the currency this year have been compounded by rising fiscal concerns. Monetary easing will be opportunistic in 2026 and deferred to the second half, aligning with the expansionary fiscal tilt.

Bank Negara Malaysia (BNM) (January 22): We expect BNM to maintain its Overnight Policy Rate (OPR) at 2.75% during its first decision of 2026. BNM is likely to continue assessing the current monetary policy stance as appropriate and supportive of the economy amid price stability. The economy likely ended 2025 resiliently, with data reflecting ongoing manufacturing expansion, supported by electrical & electronics exports, and sustained domestic demand, bolstered by a healthy labour market and continued investment progress. Inflation likely remained low amidst dampened global cost pressures, and broadly contained domestic price pressures. Goods exports and inflation data for December will likely reflect these dynamics.

Bank of Japan (January 23): The BOJ is widely expected to keep the call rate at 0.75% at this meeting, following a 25bps hike in December. Recent trade and PMI data suggest the economy remains resilient, supported by strong semiconductor demand, a steady labor market, and improving business confidence under the new leadership. Inflation pressures are easing somewhat, helped by government subsidy measures, providing additional comfort for the BOJ to maintain the current policy stance. We expect the BOJ governor to reiterate a medium-term policy normalization outlook while emphasizing a data-dependent approach. Political uncertainties and market volatility ahead of the February snap election are likely to keep the BOJ cautious on near-term policy changes, favoring a wait-and-see approach at least until April.

Forthcoming data releases

Hong Kong SAR: Consumer prices growth is expected to slow from 1.2% in November to 1.1%yoy in December, amid lowered residential rental price. The residential average rental yield dropped from peak at 2.96 in August to 2.88% in the latest print. At the same time, the local resident departure increased 11%yoy in December, higher than the 8% growth of mainland tourist arrivals, adding pressure on basic food, durable goods and clothing prices.

Japan: December trade and inflation data are due this week. Export growth is expected to remain in resilient single digits, supported by rising semiconductor demand, which offsets pressures from US tariffs on automobiles. CPI inflation, meanwhile, is projected to decelerate to 2.2% yoy from 2.9% in the previous month, as lower utility bills help offset the inflationary impact of yen depreciation. The combination of resilient growth and easing inflationary pressures should provide comfort for the Bank of Japan, allowing it to maintain the policy rate at 0.75% at this week’s meeting.

South Korea: 4Q25 GDP estimate (preliminary) is due this week. On a qoq (saar) basis, growth is expected to show a modest decline of -1.2%, a payback from 5.4% in 3Q. On a yoy basis, GDP growth is projected to slow to 1.5%, down from 1.8% in 3Q. Exports remained steady in the Oct–Dec period, supported by strong AI-related semiconductor demand, which helped offset tariff pressures. In contrast, consumption and investment slowed somewhat, reflecting the fading impact of earlier government support measures. For the full year 2025, GDP growth is expected to align with our forecast of 1.0%. Looking ahead, we continue to anticipate around 2% GDP growth in 2026, largely driven by robust AI demand.

Taiwan: December export orders and industrial production data are due this week. Export orders are expected to ease modestly but remain around 30% yoy, while industrial production is likely to show a similar trend at roughly 10% yoy. Earlier data indicated that exports slowed to 43.4% yoy in December from 56% in November, while the manufacturing PMI rebounded to 50.9 from 48.8. AI-related demand for semiconductors and information & communication products remains robust. Business sentiment is improving as a Taiwan-US trade deal nears completion, helping to mitigate tariff pressures. Our 2026 GDP forecast of 4.8% remains firmly on track.

Singapore: We expect Singapore’s headline inflation to be around 1% yoy in December 2025, close to the readings from the previous two months. Price pressures continued to be primarily driven by essential services, such as healthcare and public transport, and car price increases. These were partly mitigated by declines in retail goods and utilities prices, alongside manageable and relatively stable inflation across accommodation and food items.

  Economics Team

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