Central bank meetings

Reserve Bank of India (Dec 5): Reserve Bank of India (RBI) monetary policy committee (MPC) is due to release its rate decision on Friday, Dec 5. In recent remarks, Governor Malhotra had provided dovish cues. Back in Oct25, the MPC had signaled that there was room to lower rates, subject to progress on the US-India trade negotiations, inflation trajectory, impact of the indirect tax cuts and pace of policy transmission. On these grounds, inflation has undershot its quarterly projection by a wide margin, a trade deal with the US is still pending, while Jul-Sep25 quarter GDP is expected to register a strong print of over 7% growth and GST cuts set the Oct-Dec25 quarter for a firm start. A weak rupee has been a thorn on the policymakers’ side, as the currency slid to a new low and USDINR stabilised into a new range above 89.00. Authorities have defended the currency aggressively in recent weeks, but a firm dollar, portfolio equity outflows and a temporary widening in the goods trade deficit have offset part of its impact.

This backdrop will make the rate decision a close call, albeit we see a more than even chance that the MPC will lean towards a 25bp rate cut, alongside downward revisions to the FY26 inflation forecast (at least 50-60bp). To make a case for rate reductions despite strong growth numbers, the RBI MPC will likely highlight risks to the forward-looking growth trajectory, with prevailing low inflation providing them with the necessary room to reduce rates. Commentary will be balanced, to prevent a redux of post-June hardening in bond yields, which alongside OMOs should bode well for bonds, taking 10Y yields down at least 20-30bp from prevailing levels. 

Forthcoming data releases

Hong Kong SAR: Retail sales growth is expected to accelerate from 5.9%yoy in September to 7.6% in October, supported by a rise in visitor arrivals. Although local resident departures remain elevated, Mainland visitor arrivals climbed to 111k per day, up 9%yoy. During the National Day Golden Week, inbound arrivals reached 1.64mn—including 1.4mn from Mainland China, a 15%yoy increase—while hotel occupancy rose to 90%. Diffusion indices showed broad-based improvement across consumption-related sectors, with the retail component reaching a 22-month high.

South Korea: November trade and inflation data are due this week. Export growth is expected to remain in single digits, supported by continued strength in semiconductor demand. On the inflation front, CPI is likely to ease slightly to 2.3% yoy in November, down from 2.4% in October. Underlying price pressures remain subdued amid a stable labor market and soft consumption.

However, upside risks are increasing. The recent weakness of the KRW is raising imported inflation, while the rebound in Seoul property prices could spill over into broader inflation and inflation expectations. At its November 27 policy meeting, the Bank of Korea highlighted concerns over KRW depreciation and rising property prices, signaling no intention to cut rates further. We have removed the final 25bps rate cut from our 1Q26 forecast and now expect the policy rate to remain at 2.50% through 2026.

Taiwan: November inflation is likely to remain stable at 1.6% yoy, compared to 1.5% in October. Both demand- and supply-side price pressures remain subdued, reflecting steady domestic wage growth, a weak property market, and low international oil prices. With inflation consistently within the central bank’s 1.5–2.0% comfort zone, there is some room for monetary easing. However, resilient GDP growth reduces the urgency for policy action. We expect the central bank to keep monetary policy unchanged at the December meeting, including the benchmark discount rate, the RRR, and existing credit controls.

Thailand: We expect Thailand’s headline inflation to be -0.6% yoy in November 2025, extending the negative reading for the eighth consecutive month. The muted overall price pressures below the Bank of Thailand (BOT)'s 1-3% target continued to be due to falling energy and raw food prices, amidst a combination of lower global crude oil prices in yoy terms, government cost-of-living relief measures, and ample food supply. Core inflation likely remained low and positive. The BOT has signalled that monetary policy will stay accommodative throughout 2026. Governor Vitai Ratanakorn reiterated in late-November that there is room to lower the policy rate if needed.

Vietnam: Vietnam’s economy was likely supported by continued export growth, although still-contained inflation ticked up in November 2025. We expect goods export expansion of 17.0% yoy in November, as electronics shipments remained supported by ongoing US tariff exemptions on electronics goods, and positive demand for electronics components that benefitted from the spillovers of the AI boom. However, we expect ongoing headwinds to non-electronics exports from the 20% US reciprocal tariffs. Weather disruptions that persisted into November could have held back retail sales growth, while stoking higher food price pressures that pushed headline inflation up to 3.4% yoy.

Indonesia: Inflation is expected to print 2.9% yoy rise, steady from the month before. Food is expected to be the main contributor to the headline, but non-food segments will receive part relief on account of welfare support measures. Personal care segment (6.1% weightage) is likely to stay relatively elevated due to gold prices, though expected to moderate into late-2025. Overall, we expect annual inflation to average a tepid 2% yoy this year, at the lower end of the BI’s target range. We have pencilled in a rate cut in Dec, though the actual move will hinge on the US Fed’s move/ commentary in Dec, rupiah momentum and growth conditions.

  Economics Team

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