Week Ahead for FX, Bonds : Fed Rate Decision in -2-

The release of Australia's fourth-quarter inflation data on Wednesday will likely settle the debate about the need for the Reserve Bank of Australia to start raising interest rates or not at its February policy meeting.

The RBA ruled out further cuts in December and shone a light on renewed inflation risks. The data flow since has been strong, especially in the area of consumer spending.

Money markets moved to price in a 60% probability of a February hike this week on news that unemployment fell sharply in December. The data will have eased concerns at the RBA that raising interest rates next month might unduly push unemployment higher.

But the RBA still needs a smoking gun in the CPI data, with most attention on the trimmed mean core inflation.

Inflation is already above the RBA's target band and any sense that it will continue to drift higher over coming quarters is likely to be enough for the central bank to start hiking rates and suggest that there could be more in the pipe if price pressures don't cool.

Philippines

The Philippines will release fourth-quarter economic growth data on Thursday, which will show if it has managed to meet the government's 5.5%-6.5% growth target for 2025. The Southeast Asian economy grew 5.7% in 2024.

Growth is expected to remain subdued at around 4.1%, ING economists said. "This would reflect a deeper decline in government spending and further weakness in consumption, as indicated by softer retail sales and slowing credit growth during the quarter," ING added.

Over the past year, growth has been weighed down by a widening domestic corruption scandal, alleging that billions of pesos in public funds were diverted into government flood-control projects that were never started or were substandard.

Bangko Sentral ng Pilipinas has cut its policy rate five times in 2025 to support the economy, saying in December that any additional easing will likely be limited and will be guided by incoming data.

Singapore

Singapore's central bank is slated to announce its monetary policy decision on Thursday. The city-state's core consumer-price index--a measure closely watched by the Monetary Authority of Singapore that excludes private road transport and accommodation costs--for December came in at 1.2%, which Barclays economist Brian Tan says is stable and unlikely to trigger earlier policy tightening.

He expects the MAS to only change its policy parameters in July, noting that it needs to get more comfortable with the sustainability of the artificial-intelligence boom. The central bank uses the exchange rate as its policy tool due to Singapore's small and open economy.

Taiwan

On Friday, Taiwan is scheduled to give its first estimate for economic growth in the final quarter of 2025, which is set to show that the island delivered a blockbuster year of expansion as the AI boom fueled demand for its exports.

DBS's economics team expects full-year GDP growth to reach around 7.5%, ranking Taiwan among the top three performers in Asia.

The island economy, home to chipmaking titan TSMC, likely ended the year with a bang, with DBS predicting headline growth at around 9% on the year as exports momentum accelerated further to 47.5% amid relentless appetite for chips and electronics.

Hong Kong

On Friday, advance GDP figures will show if the Hong Kong economy's recovery continued in the final quarter of last year.

The data come as the city's economy shows signs of strength, outperforming expectations in the third quarter, buoyed in part by a retail sales rebound and a booming equities market.

The economics team at DBS reckons that a high base effect will lead to a softer print in the final three months of the year, however. They expect to see a slowdown to 3.0% on-year growth from 3.8% in the preceding quarter.

A bright spot is likely to come from exports, which DBS expects to have surged 17% on year in December, bringing full-year export growth to 14.5%. The jump was likely driven by deepening trade links between China and non-U.S. markets, the economists said.

South Korea

South Korea is set to report strong export growth for January on brisk semiconductor demand and more working days, with trade data due out on Sunday.

Preliminary customs data for the first 20 days of January showed that overall exports grew at a faster pace, with chip exports hitting another record high, Citigroup economist Jin-Wook Kim said in a note.

Exports to China, most Southeast Asian economies and Taiwan as well as the U.S. all improved during the Jan. 1-20 period, Kim noted.

Citi expects full-month January exports to surge 30% on year, also supported by 3.5 more working days as the lunar New Year holiday shifts to February this year.

Imports could rise 16% on year in January, resulting in an estimated $4.6 billion trade surplus, Citi says.

Any references to days are in local times.

Write to Jessica Fleetham at [e-mail] and Jihye Lee at [e-mail]

(END) Dow Jones Newswires

01-23-26 1154ET