- ECB to raise the deposit facility rate by 25bp to 2.50%.
- China and Taiwan to report double digit exports growth in August, though easing from recent peaks.
- CPI inflation to remain elevated in the US, Taiwan and Thailand, but weak in China.
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European Central Bank
The ECB Governing Council is expected to raise the benchmark deposit facility rate by 25bp to 2.5%. Eurozone’s inflation-growth mix is likely to convince policymakers that the economy can withstand further monetary tightening. Inflation jumped to 3.3% yoy in August from 2.9% month before, moving further from the 2% target, primarily driven by 14.3% increase in the energy component. Core inflation, however, stayed steady at 2.4% yoy, accompanied by softening service inflation, suggesting spillover risks are limited at this juncture. However, from the ECB's perspective, the risk is that sustained increase in inflation eventually broadens into wages, services and inflation expectations, preferring to act pre-emptively. On the real activity end, incoming data has been mixed. Meanwhile, sell off in the global bonds has also swept European rates higher, suggesting investors are growing wary of wide deficits in light of geopolitical tensions, higher defence expenditure and other prevailing uncertainties.
China
Exports growth is expected to decelerate from 23.9% yoy in July to 18.5% in August, amid renewed Middle East conflict. While the new export orders PMI turned marginally positive at 50.1 in August, high-frequency indicators point to softer export momentum. Average daily deadweight tonnage handled at China’s 20 major ports declined from 12.1% yoy growth in July to -0.7% in August. Freight activity also weakened, with international cargo flights slowing from -1.6% yoy in July to -2.8% in August. On price front, factory-gate and raw material prices rebounded amid the renewed escalation at the Strait of Hormuz. However, with the pass-through to downstream consumer prices likely to remain contained under the pricing-band mechanism, CPI growth is expected to accelerate from 0.5% yoy in July to 0.7% in August. Weak domestic demand is also expected to weigh on consumer prices growth.
Malaysia
We expect Malaysia’s industrial production to continue expanding in July 2026, growing by 5.0% yoy, supported by the export oriented segment, underpinned by resilient demand for artificial intelligence-related electronics. However, the pace was likely moderate than 6.5% yoy in June, due to higher base effects especially in mining.
Taiwan
August trade and inflation data are forthcoming. Export growth is expected to come in at around 30% yoy, broadly steady from 32.9% in July, but slower than the 43.7% average in 2Q and the 51.1% peak in 1Q. The US-led AI investment boom appears to be transitioning from a supercycle to a more steady cycle as high base effects emerge, global interest rates rise, and regulatory uncertainties increase. On the price front, CPI is expected to remain elevated at 2.5% yoy in August, broadly unchanged from July. Upstream price pressures, as measured by PPI, remain elevated, while downstream cost pass The Week Ahead September 4, 2026 3 through is expected to gradually take place as domestic consumption recovers and pricing power improves. With CPI consistently running above 2%, the central bank is likely to face greater pressure to hike rates in the coming months, with December a likely timing for the hike.
Thailand
We expect Thailand’s headline inflation to rise to 2.3% yoy in August 2026, from 1.9% yoy in July, driven by the continued cost pass-through of higher energy prices relative to a year ago into core inflation, despite moderate energy inflation. Meanwhile, food inflation faces upside risks from adverse weather conditions associated with an intensifying El Nino. With headline inflation remaining within the Bank of Thailand’s 1-3% target and the rise in inflation largely reflecting temporary supply-side shocks, we expect the central bank to look through these effects, and maintain its accommodative monetary policy stance through the remainder of 2026 to support uneven economic growth.
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