Asian cen­tral banks un­likely to hike in­ter­est rates next week

The Pak Banker - - Company& -

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.

Adding

to

the

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

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