Central bank meetings

Bank Negara Malaysia (BNM) (Sep 4): We expect BNM to maintain its overnight policy rate (OPR) at 2.75% during its September meeting, adopting a wait-and-see approach for the time being, following the pre-emptive 25bps cut in July. Since July, there has been some clarity on US reciprocal tariffs, although they are high, and the external landscape is still clouded by ongoing threats of US sectoral tariffs on semiconductors. While Malaysia’s external-oriented economy is bracing for an export slowdown in 2H25, BNM Governor Sri Abdul Rasheed Ghaffour stated on August 15 that the ‘recent OPR cut would provide an additional lift to domestic growth’, and is consistent with BNM’s growth and inflation outlook. This suggests a lack of urgency to ease monetary policy in the absence of severe growth shocks. Amid modest inflation prospects and a highly uncertain global environment threatened by the US tariff roller coaster, we still see space for BNM to leave the door open for more accommodative monetary policy.  

Forthcoming data releases

Hong Kong SAR: We expect retail sales to rise by 1.2%yoy in July, supported by stronger domestic and tourist spending amid a weaker HKD. We base this on the following: (i) consumption sentiment has improved, (ii) mainland visitor arrivals averaged 111k per day in July, up from 87k in June during the summer holiday period, and (iii) average local resident departures eased slightly to 311k per day.

South Korea: August trade and inflation data are due next week. Exports are expected to show a modest slowdown following the implementation of reciprocal tariffs on August 7. Despite a trade deal with the US, South Korea continues to face a 15% tariff—both overall and specifically on autos. While first-order effects from export competition and substitution appear limited, the broader slowdown in global demand remains a key headwind. CPI inflation is expected to stay subdued at around 2% YoY, giving the Bank of Korea room to ease monetary policy. At its August 28 meeting, the BOK held rates steady, citing the need to monitor property prices and household debt. Still, 5 of 6 board members remain open to further easing in the next three months. We continue to expect a final 25bps cut in 4Q, lowering the base rate to 2.25%.

Taiwan: August CPI inflation is expected to stay subdued at around 1.5% YoY, driven in part by falling import and producer prices amid currency appreciation. Property prices have also softened further, reflecting the impact of earlier RRR hikes and credit tightening measures. While typhoon-related disruptions may have pushed up fresh food prices, the effect is likely temporary. A more sustained slowdown in inflation and property markets is needed to trigger policy easing. We expect the central bank to hold the policy rate at 2.00% in September, with rate cuts likely starting in December at the earliest.

Indonesia/Philippines: Inflation numbers are expected to remain largely steady in Indonesia and Philippines in August. With food costs off the boil and benign commodity prices, we expect Indonesia inflation to be little changed at 2.3% YoY vs 2.4% YoY in July. Philippines’ reading is likely to inch up towards 1.2% vs 0.9% in July. With inflation within the central bank’s targets, the BSP and BI are expected to maintain a dovish bias. With the US Fed also expected to resume rate cuts September onwards, Asian policymakers will have more room to take a growth supportive stance. After an-anticipated cut in August, BSP Governor Remolona signalled that the benchmark rate might be near the neutral rate, with room for likely one last cut before entering a prolonged pause. We have pencilled in a 25bps rate cut each for the BSP and BI in the rest of 2025, with a higher likelihood of additional cuts by the Indonesian central bank within 4Q25, while the BSP pushes for transmission of rate cuts undertaken to date.

Thailand: We anticipate Thailand’s headline inflation to remain muted at -0.8% YoY in August 2025, extending the negative print for the fifth consecutive month. The subdued price pressures continued to be due to declines in energy and raw food prices, while core inflation remained positive but low. With headline inflation being consistently below the Bank of Thailand (BOT)’s target, we see room for the central bank to further ease monetary policy to support an economy that faces various domestic and external challenges, including potential shocks from US sectoral tariffs that are pending from the Trump administration.

Vietnam: We expect Vietnamese goods export growth to slow to 12.0% YoY in August 2025, down from 16.0% YoY in July. Shipments to the US, Vietnam’s largest goods exports destination at ~30% of the total, were likely dampened by higher US reciprocal tariff rate of 20% effective from August. It doubled from 10% during the 90-day pause, although less than half of the 46% threatened on Liberation Day. A payback from earlier order front-loading would become increasingly apparent in the coming months. Electronics exports face a looming storm from Trump’s ongoing threats of sky-high US semiconductor tariffs, albeit with some exemptions. Retail sales growth in August likely continued to be bolstered by supportive foreign tourist arrivals. Headline inflation likely registered at 3.5% YoY in August, remaining contained below the central bank’s 4.5% target for 2025. Nonetheless, we are watchful of supply-side driven risks stemming from the return of the African swine fever, and imported price risks induced by currency depreciation.

Click here to read the full report