Barclays economists note that the key lending rate, which accounts for 62% of China's total social financing - a broad metric of credit that also includes nonbank financing - has been kept unchanged since September. They view the PBOC's comment that it will lower interest rates and lenders' reserve requirement ratios at "an appropriate time" as potentially referring to a period of dollar softness. Barclays's U.S. economics team changed its Federal Reserve forecast to one cut in June, suggesting a persistent U.S.-China interest rate differential and headwinds to the yuan.
Focus will also undoubtedly be on President-elect Trump's inaugural address and its implications for China's export-reliant economy, and any potential responses from Beijing.
ANZ economists view a near-term reserve requirement cut before the Lunar New Year holiday as very much on the table, and expect the central bank to ease immediately in the event of a tariff shock.
AUSTRALIA & NEW ZEALAND
In New Zealand, traders will await the release of inflation data for the fourth quarter of 2024 on Wednesday.
It would take a big upside shock to dislodge the Reserve Bank of New Zealand from its well-telegraphed aim of cutting interest rates further in February.
Economists expect the inflation numbers to affirm the need for more hefty rate cuts, with annual CPI expected to drop to around 2.1% from 2.2% in the third quarter.
No major data releases are expected from Australia.
SOUTH KOREA
In South Korea, advance estimates of fourth-quarter economic growth on Thursday will be watched for signs of improvement after a weaker-than-expected third quarter.
The Bank of Korea unexpectedly held its policy rate steady in January despite pressure to cut to support growth in Asia's fourth-largest economy, but signaled that the door remains open to further easing over the next three months.
Further signs of economic weakness could firm expectations the central bank will resume rate cuts soon, particularly as the BOK's governor has flagged intensified risks to growth.
ANZ Research analysts expect the data to signal lackluster growth in the final quarter of 2024, as high-frequency indicators point to domestic demand weakness, exacerbated last month as political events hurt consumer and business confidence.
ANZ expects a marginal improvement to 0.2% growth from 0.1% on a quarterly, seasonally adjusted basis, mainly driven by the semiconductor industry, but a slight slowdown to 1.4% on year.
Markets will be looking at the breakdown of the data to see if exports sustained growth and how well business investment and private consumption weathered the negative impact of political turmoil on the economy.
TAIWAN
Taiwan is due to release its advanced fourth-quarter and full-year GDP data next Friday.
The figures will likely confirm that the island economy performed strongly in 2024. Taiwan has been one of the top beneficiaries of the global technology upswing powered by the artificial-intelligence boom, as it is home to the world's largest contract chip maker, TSMC, and accounts for the bulk of the world's advanced semiconductor manufacturing capacity.
Fourth-quarter growth is expected to have moderated from the robust 4.17% rate seen in the third quarter in part due to a high base, with economists' forecasts ranging from 1.5% to as much as 3.3%.
But full-year growth is still projected to nearly triple from 2023. Taiwan previously raised its annual forecast to 4.27% after a strong third-quarter result, which would be a big jump from the weak expansion seen in the prior year.
ANZ economists expect 2024 growth to have climbed 4.2% while ING is more upbeat with a forecast of 4.7%, up from 1.4% in 2023.
MALAYSIA
Malaysia is in for a data-packed week, spearheaded by the central bank's policy decision on Wednesday, when it is widely anticipated to keep rates steady yet again.
Bank Negara Malaysia has held rates steady since May 2023, and could well continue to toe that line this year, as solid economic growth and stable inflation remove the urgency to adjust policy settings.
Consumer inflation data for December due just ahead of the rate decision will likely confirm
that price pressures have been largely tamed in the Southeast Asian economy.
HSBC economists expect inflation to have averaged 1.9% for the year, which would mark another step down from the 2.5% seen in 2023. However, factors like fuel subsidy rationalization could push up inflation, they added.
Their base case is for BNM to hold its policy rate at 3.0% this year, but it will be key to watch how inflation develops. It will also be interesting to see if the central bank's neutral policy stance changes amid trade uncertainty, HSBC said.
Other data on tap include December's trade data on Monday, which will show if exports continued to expand in the final month of the year.
Any references to days are in local times.
--Additional reporting by - Additional reporting by Megumi Fujikawa, James Glynn, Amanda Lee, Kimberley Kao, Sherry Qin, Ronnie Harui, Xiao Xiao, Emese Bartha and Miriam Mukuru
Write to Jessica Fleetham at jessica.fleetham@wsj.com and Fabiana Negrin Ochoa at fabiana.negrinochoa@wsj.com
(END) Dow Jones Newswires
01-20-25 0314ET
