Week Ahead for FX, Bonds : Fed Expected to Cut -2-

With the economy very weak, it would take a big surprise rebound in growth to put a dent in expectations for further interest-rate cuts by the Reserve Bank of New Zealand.

THAILAND

The Bank of Thailand will deliver its interest-rate decision on Wednesday, where analysts will watch to see if it delivers a second cut.

The central bank only joined the rate-cut club in October, later than many of its peers, easing policy settings for the first time in over four years to boost the economy.

The decision was not unanimous, and economists will look to see if there is more or less dissent among policymakers this time.

Data since then has painted a better economic backdrop for December's meeting: The economy grew at its fastest pace in two years in the third quarter, paring expectations of more easing. Inflation remains anemic, however, backing the case for a cut.

Juliana Lee, chief Asia economist at Deutsche Bank, says that "while the Bank of Thailand may temporarily pause in December, after easing in October as per our expectation, we see limited inflationary pressure to provide room for moderate easing next year." Although Deutsche Bank's baseline growth forecast for Thailand's growth remains at 2.9% for 2025, she noted that "a more severe tariff war could drag on growth by one percentage over the medium term, as its dependence on imports from China pose risks to its trade relations with the U.S."

INDONESIA

Indonesia's central bank announces its rate decision on Wednesday, with economists wondering whether it will look past the sharp slowdown in inflation and opt for another hold.

At its prior meeting, Bank Indonesia extended its rate-cut pause as it sharpened focus on stabilizing a rupiah buffeted by renewed dollar strength in the wake of the U.S. election.

Since then, inflation has tumbled to 40-month lows. Combined with expectations for Federal Reserve easing in December, that sets the stage for a BI cut, Maybank analysts said. They don't think currency concerns will prevent a move, as rupiah depreciation was relatively modest in November and Indonesia's FX reserves hit a record high in October, giving BI ample room to defend the currency.

Others aren't so sure.

DBS's Radhika Rao says that currency weakness could be a bigger bother, especially in the face of U.S.-driven uncertainty. As markets wait for Trump's inauguration to gauge the direction on tariffs, BI could err on the side of caution and stay on hold.

Trade data for November on Monday will be watched for signs of resilience in exports as trade tensions and geoeconomic fragmentation muddy the outlook for a key driver of the Indonesian economy in the year ahead.

PHILIPPINES

The Philippine central bank makes its rate call Thursday, where it could deliver a third cut of the year as inflation eases amid slower growth.

UOB economist Jasrine Loke expects the Bangko Sentral ng Pilipinas to continue its easing path with a 25-basis-point rate cut, noting that the BSP has said it will retain a measured approach in easing rates to ensure that price stability is conducive to sustainable growth and employment rates.

BSP Gov. Eli Remolona signaled in the last meeting that another cut in December is possible, and that it will take "baby steps" in its easing cycle.

HSBC economists also expect a rate cut, backed by November's headline inflation print-which remained within the lower portion of the BSP's target band-as well as third-quarter GDP that surprised to the downside.

Citi economists don't think the peso's recent depreciation will put the brakes on BSP easing as the Bank can support the currency via other means.

MALAYSIA

Malaysia will be publishing export data for November on Wednesday. Market-watchers will be checking to see if the country will continue to keep up with its exports expansion.

Inflation data on Friday, Dec. 20 will show if price pressures continue to persist, after two months of rising inflation.

The central bank had its overnight policy rate at its last meeting, reiterating that its stance remains supportive of the economy and in line with its assessment of inflation and growth.

SINGAPORE

Singapore reports non-oil domestic exports data for November on Tuesday.

Market participants will be hoping to see some improvement in the figures after an unexpected decline in October.

Signs of resilience in the trade-reliant economy's exports will add to already-firm expectations of a blockbuster year, with growth on track to more than double from 2023.

--Any references to days are in local times

--Additional reporting by Megumi Fujikawa, Ronnie Harui, James Glynn, Xiao Xiao, Kimberley Kao, Amanda Lee, Emese Bartha, Miriam Mukuru and Paul Vieira

Write to Jessica Fleetham at [e-mail] and Fabiana Negrin Ochoa at [e-mail]

(END) Dow Jones Newswires

12-13-24 1159ET