Central bank meetings

Taiwan’s central bank (Sep 18): The CBC is expected to keep the benchmark discount rate unchanged at 2.00% at its upcoming meeting. CPI rose just 1.6% yoy in August, suggesting the CBC may slightly revise down its full-year inflation forecast from 1.8%. While this provides some room for monetary easing, there is no pressing need to cut rates. Exports remained surprisingly strong through August (34.1% yoy), driven by robust AI demand and the delayed implementation of semiconductor tariffs. This strength supports a significant upward revision in the CBC’s full-year GDP growth forecast from 3.1%. In light of rising concerns over reciprocal tariffs impacting traditional industries, targeted loan support measures are more suitable than broad-based rate cuts.

The CBC is also expected to leave LTV controls on housing loans unchanged. Both property transactions and construction activity have contracted sharply, with double-digit declines, while property prices have edged down only slightly (Taipei: -0.8% yoy in July). Banks' real estate loan growth has slowed moderately (5.8% yoy in July), while loan concentration in real estate remains elevated at 36.7%. Following the government's recent move to exempt the New Youth Loan from the lending cap under Banking Act Article 72-2, the CBC may consider selective measures to support self-use homebuyers, rather than a broad relaxation of LTV ratios.

Bank of Japan (Sep 19): The BOJ is expected to keep the overnight call rate unchanged at 0.50% at its upcoming meeting. August CPI, due this week, will likely show headline inflation easing slightly below 3% yoy to 2.8%, while core CPI (excluding fresh food and energy) remains high at 3.3% yoy. This should bolster the BOJ’s confidence in achieving its 2% inflation target. However, August trade data is expected to reveal a fourth consecutive month of export contraction, declining by around -2% yoy. This weakness may prompt the BOJ to remain cautious on the growth outlook and to closely monitor the impacts of US tariffs, despite the recent Japan-US trade agreement.

Political uncertainty—triggered by Prime Minister Ishiba’s resignation—adds further complexity to the policy outlook. A potential successor within the LDP, Sanae Takaichi, supports aggressive fiscal expansion and continued monetary easing. Leaders of the opposition CDP and DPP parties also advocate for a consumption tax cut and/or the maintenance of low interest rates. The extent to which the new prime minister will influence monetary policy remains unclear. Should fiscal stimulus be implemented aggressively, it could support growth and create room for further BOJ rate hikes. However, it would also heighten JGB market volatility and likely require the BOJ to further slow the pace of QT.

Bank Indonesia (Sep 17): Bank Indonesia is expected to keep the benchmark rate unchanged at 5.0% this week after two back-to-back cuts. BI meets a day ahead of the US FOMC decision, where the Fed is expected to resume policy easing. BI’s pause this month is likely to be temporary, as policymakers take stock of recent rupiah volatility in wake of protests and cabinet reshuffle, transmission of rate cuts undertaken this year and firmer near-term food inflation. Food (and beverages) inflation rose by the fastest pace in a year at 4% yoy in August. This was partly driven by a jump in average retail prices of rice by 4% yoy in August vs -0.9% y/y in 1Q25, besides the producer price index for rice rising by 6.0% yoy vs -2.4% in 1Q25, adding to inflation buoyancy. Authorities are taking measures to boost rice supply by more than 1.0mn tons under the Food Supply and Price Stabilisation (SPHP) program from the State Logistics Agency (Bulog), besides other premium variants. The government projected a surplus of 3.5mn tons (at circa 33-34mn tons) of domestic rice production this year, dismissing the need for imports. We expect the central bank to adopt a cautious and data dependent stance in 4Q25, with our baseline forecast for a 25bp cut by year-end, which will take the rate to 4.75%.

Forthcoming data releases

China: Retail sales growth is expected to ease slightly to 3.5%yoy in August from 3.7%yoy in July. The slowdown is driven by weak job prospects and slowing income growth. Youth unemployment remains elevated at 17.8%. Industrial production is set to slow to 5.6% yoy in August, amid weakened domestic and external demand. Export growth decelerated from 7.2% yoy in July to 4.4% yoy, partly due to the US 40% transshipment tariff. Fixed asset investment is projected to decline further, from 1.6%yoy ytd in July to 1.4%yoy ytd in August, reflecting continued weakness in private sector and real estate investment. The property market remains under strain, with primary residential sales across 300 cities falling to 9.1%yoy ytd in August. Tepid credit demand and trade uncertainties pose downside risks, underscoring the need for timely policy support in 4Q.

Malaysia: We foresee Malaysia’s goods exports growth moderating to 2.5% yoy in August 2025, down from the strong 6.8% yoy expansion rebound in July. Shipments likely felt some downside impact, as still-high US reciprocal tariffs of 19% have kicked in from August. The rate is almost double from 10% during the 90-day pause, although lower than 24% threatened on Liberation Day. There were already signs of fading support from front-loading activities. Nonetheless, electronics exports likely remained resilient, consistent with the August data out for some key regional electronics exporters, amid the ongoing US tariff exemption. Looking ahead, Malaysia is still bracing a looming storm from Trump’s threat of sky-high US semiconductor tariffs, albeit with some conditions that might mitigate the negative adjustment.

Singapore: We foresee Singapore’s non-oil domestic exports (NODX) possibly extending their decline for a second consecutive month at -1.0% yoy in August 2025, compared to -4.6% yoy in July, partly due to still-high base effects. Electronics shipment numbers on yoy terms were likely weighed down by adverse base effects (electronics NODX registered the highest reading of 2024 in August 2024 of 32.8% yoy), even as external demand for electronics remained supported by Artificial Intelligence-related developments and ongoing US tariff exemptions on electronics goods. While US reciprocal tariffs on Singapore’s goods have been maintained at 10%, the increase in duties for the city’s trading partners that kicked in from August likely filtered through the supply chain, weighing on external demand for other NODX products. Non-oil re-exports (NORX) data will continue to provide a better gauge of front-loading momentum, which we expect to be on a dissipating path since the peak in April.

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