Asian central banks unlikely to hike interest rates next week
HONG KONG: Three of Asia's central banks have policy decisions in the week ahead, but none seems likely to hike interest rates, after a wave of weak economic data swept through the region.
First up will be the Reserve Bank of Australia, which is due to announce its cash-rate decision Tuesday afternoon in Sydney.
The RBA hiked the policy rate at its last meeting in early November, surprising the markets with a quarter-point increase to 4.75%.
But economic numbers released this past week suggest a sizeable pause is coming. Third-quarter gross domestic product data showed the economy slowing to 0.2% growth from the previous quarter, well below the revised 1.1% growth clocked in the April-to-June period. See report on Australian GDP data.
gloom, Australia also reported a sizeable 1.1% drop in October retail sales, even as economists surveyed by Dow Jones Newswires had tipped a 0.4% gain. Add to that a late November statement from RBA Gov. Glenn Steven that policy setting are at an appropriate level for the time being, and it looks likely that Australia will hold its monetary fire for some time to come. In fact, Dow Jones Newswires reported economists see any further tightening as off the table until at least the middle of next year.
On Thursday, the Reserve Bank of New Zealand is due up, and here chances are slim for any sort of action. The bank hasn't raised its overnight cash rate since late July, when a quarter-point hike pushed the benchmark to its current 3.0%.
This is all the more so given New Zealand's subdued inflation outlook, with a survey this past week by the National Bank of New Zealand showing businesses expect an average inflation rate of 2.86% for the coming year, down from 2.91% in the previous month's survey, according to Reuters.
Reuters also cited expectations that much like its Australian cousins, the RBNZ could remain on hold until the second quarter of 2011. Rounding out the monetarypolicy trio, the Bank of Korea is also slated to make its rate decision Thursday morning, with only a slim chance of a hike there. Like Australia, South Korea's central bank tightened the policy rate at its most recent meeting, raising it to 2.5% with a quarter-point hike. However, unlike Australia, the Bank of Korea's recent hike came after a three-month pause in rate moves, and a surprise drop in industrial production data released this past week adds to reasons why a second-straight increase is unlikely. -PB News