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CENTRAL BANK MEETINGS

Bank of Japan (September 18)

It is almost a done deal that the Bank of Japan will hike rates at the upcoming meeting on Sep 17-18. Recent data strongly support the case for a rate hike. Final 2Q GDP confirmed that the economy continued to grow at an on-trend pace of 1.4% QoQ saar, or 0.9% YoY, in 2Q. July wage data also surprised on the upside, with total wages and base wages rising 4.7% and 4.1% YoY, respectively. Meanwhile, underlying inflation measures, including CPI excluding fresh food, energy and institutional factors and trimmed mean CPI, have converged with the 2% price target, rising 2.2% and 2.0% YoY, respectively, in July.

The most likely outcome is for the BOJ to deliver a hawkish 25bps hike while signalling a flexible pace of rate hikes at future meetings. An outsized 50bps hike at this meeting or back-to-back rate hikes at every meeting is not our base case. While BOJ board member Takata recently mentioned the possibility of an outsized rate hike, he is well known as a hawk and does not represent the majority view. More importantly, the BOJ should remain mindful of the market impact of large policy surprises, given that the unexpected rate hike in July 2024 triggered a massive JPY carry-trade unwinding and jitters across global financial markets.

Taiwan’s central bank (September 17)

We expect the central bank to keep its policy rate unchanged at the September 17 policy meeting, before hiking rates to 2.125% at the next meeting in December. August CPI data suggest little urgency for the CBC to hike rates: headline CPI came in slightly below expectations at 2.0% YoY, while core CPI eased marginally to 2.3%. That said, we expect the CBC to retain a somewhat hawkish tone. The central bank is likely to remain vigilant about the risk of persistent supply-side inflation, particularly given the renewed rise in global oil prices amid prolonged tensions in the Middle East. Policymakers are also likely to highlight the risk of second-round inflationary pressures stemming from a potential rise in inflation expectations, higher wages, and a recovery in domestic consumption.

FORTHCOMING DATA RELEASES

China

Industrial production is expected to improve from 4.5% yoy in July to 5.0% in August, supported by strong exports. Export growth edged up from 23.9% yoy in July to 25.0% in August, amid robust demand for AI-related electronics. However, on domestic front, retail sales growth is expected to remain subdued at 0.4% in August, partly due to a high base from last year’s trade-in subsidy programmes. High precautionary savings and falling property prices continue to weigh on consumption, while weak property markets are likely to keep household wealth under pressure.

On the investment side, the decline in fixed asset investment is expected to expand further from -6.7% yoy ytd in July to -7.0% yoy ytd in August. Corporate investment remains cautious amid the ongoing anti-involution campaign, while the property downturn continues to be a major drag. China’s shift from presales towards completed-home sales is likely to weigh on near-term investment, land acquisitions and project starts, particularly among highly leveraged private developers.

Malaysia

We expect Malaysia’s goods exports growth to remain robust at 43.5% yoy in August 2026, up from 38.0% yoy in July, amid favourable base effects. Export momentum remained anchored by the electrical & electronics segment, underpinned by robust artificial intelligence-related demand, although oil & gas exports expanded at a moderate pace than their April’s peak, reflecting energy prices that were below earlier highs. On inflation, we expect headline CPI to remain steady at 1.8% yoy in August, with price pressures contained by targeted fuel subsidies and stable domestic demand conditions, despite rising food price increases.

Singapore

We expect Singapore’s non-oil domestic exports (NODX) growth to accelerate to 35.0% yoy in August 2026, from 24.2% yoy in July. Overall NODX strength remained supported by robust electronics shipments, driven by strong artificial intelligence-related demand, despite weaker performance in non- electronics exports. The yoy pickup was likely boosted by favourable base effects, as August 2025 recorded the weakest monthly NODX reading of the year.

India

India’s inflation is expected to quicken to 4.9% yoy from 4.4% month before. Food inflation continues to rise, driven by pulses, sugar, and dairy etc., while vegetables rose by a slower pace. After two years of normal monsoon, cumulative southwest rainfall this year is currently 15% below the long-term average (as of early-September), alongside slower build-up in reservoir levels, which could impact upcoming rabi crops as well. Energy prices have remained volatile, raising input cost pressures that could gradually filter through to consumers, even as retail fuel prices have been kept unchanged since May. A gradual broadening of price pressures is likely to keep inflation readings above 5% in second half of the fiscal year, underscoring the need for a tighter policy bias. The goods trade deficit is, meanwhile, likely to stay wide at $30bn as an improvement in exports is accompanied by a further widening in the energy import bill.

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