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Asia Week Ahead: Central Bank Decisions; Inflation; and Trade

The week ahead in Asia will be packed with a number of central bank decisions and macroeconomic data, with investors set to track the impact of the Middle East conflict on regional economies.The economic calendar starts quietly on Monday with services activity data from Japan, whole inflation figures from India and New Zealand's services PMI.Activity picks up Tuesday as the Reserve Bank of Australia and Bank of Japan announce policy decisions, while China releases a batch of closely watched activity indicators.Wednesday shifts the focus to trade, with Japan and Singapore due to report May figures.Thursday brings a cluster of central bank decisions from Taiwan, Indonesia and the Philippines, with New Zealand's first-quarter GDP and Thailand's trade data also on deck.Friday rounds out the week with inflation data from Japan and Malaysia, with New Zealand reporting trade numbers.Here's what to watch in the week ahead.MONDAY, June 14The week was off to a relatively light start with a handful of releases from India, New Zealand, and Japan.Japan released its tertiary industry activity index for April, a measure of change in the total value of services provided and consumed by the country's service sector.The index rose a seasonally adjusted 1.3% month on month, reversing from a 0.6% decline in the prior month and recording its first increase in three months.It also beat the Trading Economics forecast of a 0.5% increase.In New Zealand, the BusinessNZ Performance of Services Index fell to 47.5 in May from a downwardly revised 48.7 in April, marking a fourth straight month of contraction in the services sector. Trading Economics said the decline came as the Iran war weighed on business activity.India's annual wholesale price index (WPI)-based inflation rate rose to 9.68% year over year in May. The reading was higher than the consensus forecast of 9.10% tracked by Investing.com and compared with an 8.26% pace recorded in the prior month.Later Monday, India reports unemployment stats for May.TUESDAY, June 16Macro activity picks up Tuesday with central bank decisions scheduled in Australia and Japan, and a slew of monthly data from China.The Reserve Bank of Australia is expected to hold the official cash rate steady at 4.35%, according to a Trading Economics consensus.Economists at National Australia Bank said the latest decision would mark the end of the tightening cycle, with the next move likely down and now expected in the second quarter of 2027.In contrast, the Bank of Japan is forecasted to raise interest rates by 25 basis points to 1%, according to a Trading Economics consensus estimate.Bloomberg reported earlier June that the central bank was considering raising the policy rate amid high uncertainties over the Middle East conflict. Officials were expected to sift through as much data as possible until the last minute before making a final decision, though the decision to raise rates was unlikely to be unanimous, according to the report.China's industrial production and retail sales stats will also be in the news, alongside monthly unemployment and housing price data.Markets will review the figures to gauge how well the country's economy is faring amid the Middle East conflict. According to the Wall Street Journal, the data is likely to indicate overall improvement and economic resilience despite the macro headwinds.Hong Kong will report unemployment data the same day, while trade stats will be in focus in India and South Korea.In New Zealand, markets will await food inflation data which is expected to show "modest increases," according to CommBank.WEDNESDAY, June 17Focus shifts Wednesday to trade data from Singapore and Japan.Japan is expected to record a trade deficit of 564.6 billion yen in May, reversing from a 301.9 billion yen surplus a month earlier, according to a Trading Economics consensus.Wednesday will also bring the Reuters Tankan Index for June, a key gauge of Japanese business confidence, along with monthly machinery orders data.Meanwhile, Singapore's trade surplus is expected to narrow to $7 billion in May from $13.07 billion in April, according to Trading Economics. The city-state is also due to release monthly non-oil export data.A forward-looking report from Westpac capturing consumer confidence in New Zealand is also scheduled for Wednesday.THURSDAY, June 18Central banks across Taiwan, Indonesia and The Philippines will meet for interest rate decisions Thursday.Bank Indonesia will be in focus after it unexpectedly raised interest rates by 25 basis points earlier this month to support the rupiah.While some economists expect the central bank to deliver another 25 basis point hike, ING expects Bank Indonesia to hold rates steady and instead prioritize alternative measures to attract foreign capital inflows and stabilize the currency.The Philippines' central bank, Bangko Sentral ng Pilipinas, is widely expected to raise its benchmark rate by 25 basis points to 4.75% amid persistent inflationary pressure, according to a Trading Economics consensus.Meanwhile, Taiwan's central bank is expected to hold rates steady at 2%. ING said it will be monitoring the Central Bank of the Republic of China's press conference for clues on a possible rate hike in the third quarter.Elsewhere, New Zealand will report its first quarter gross domestic product growth rate. CommBank said it expects quarterly growth to reach 0.8%, shy of the Reserve Bank of New Zealand's 1% forecast.While the economy started 2026 with a decent moment, there will be "pockets of weakness" highlighting that economic recovery was a "bit patchy," CommBank said in a preview.Lastly, Thursday will feature Thailand's trade figures for May.FRIDAY, June 19The week rounds off with closely watched inflation data from Japan.According to ING, May's consumer prices could record a rise of 1.6% year on year, accelerating marginally from 1.4% in April. The subdued increase would reflect government measures, though price pressures are likely to broaden, ING said.Malaysia's headline inflation, also due the same day, is similarly expected to show a marginal rise to 2% year-on-year in May from 1.9% in April due to government fuel subsidies and stable food prices, the Wall Street Journal reported, citing DBS.Malaysia will additionally report monthly trade figures on Friday, while Macao will release monthly inflation data the same day.Trade figures from New Zealand will also feature Friday. According to a Trading Economics consensus, New Zealand's May trade surplus could narrow to NZ$875 million from NZ$1.92 billion a month earlier.South Korea's producer price inflation will also be among the highlights of the day.

US, Iran Reach Peace Agreement, Formal Signing Due Friday

U.S. and Iranian officials have confirmed a peace agreement to end the war and reopen the Strait of Hormuz, with a formal pact expected to be signed in Switzerland on Friday.U.S. President Donald Trump said in a post on Truth Social that the agreement with Iran was "complete" and authorized the immediate lifting of the U.S. naval blockade.Separately, Iran's Deputy Foreign Minister Kazem Gharibabadi confirmed that an agreement had been reached to end the conflict, according to multiple media reports.Pakistan Prime Minister Shehbaz Sharif, who mediated the negotiations, said in a post on X that the peace accord would be signed on Friday, June 19.Sharif added that both sides had agreed to an immediate and permanent cessation of military operations across all fronts, including in Lebanon.

World Bank Forecasts Slower East Asia-Pacific Growth in 2026

The World Bank lowered its 2026 economic growth forecast for the East Asia and Pacific region as the conflict in the Middle East raises energy costs, disrupts supply chains, and weighs on external demand.The international organization said it expects growth in East Asia and the Pacific to moderate to 4.2% in 2026 from 5.0% in 2025, according to its Global Economic Prospects report released Thursday.Growth in the region is projected to edge up to 4.3% in 2027 and 2028 as energy prices ease and geopolitical uncertainty diminishes.Excluding China, economic growth is forecast at 4.4% in 2026, down from 4.8% in 2025, before improving to 4.9% in 2027 and 2028.

Market Chatter: Asia May Face Stagflation Amid Middle East Crisis, ADB President Says

With the war in the Middle East driving up inflation in global economies, Asian economies are at risk of stagflation, Nikkei Asia reported Thursday, citing Asian Development Bank President Masato Kanda.As inflation pressures mount, "There is now a risk of stagflation spiral" due to "declines in demand through lower real wages, and increases in debt burdens from higher interest rates," Kanda told the news outlet on the sidelines of Nikkei's annual Future of Asia forum.According to Kanda, higher shipping, energy, and input costs will lead to a further rise in consumer prices in Asia. There was a risk that the supply chain system would "physically stop functioning," he said.Asian countries are especially impacted by the energy crisis arising from the Middle East war, as they are highly dependent on energy imports that come in through the Strait of Hormuz, the report added."In addition to diversification of the destination of oil and gas, accelerated use of renewable energy and safe nuclear power, as well as stronger energy saving, should have been promoted," Kanda said.(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

Bank Indonesia, China's Central Bank Strengthen Currency Swap Cooperation

The central banks of Indonesia and China agreed to explore expanding the size of their bilateral currency swap arrangement, as well as reaffirmed their commitment to increasing the use of local currencies in bilateral transactions.To that effect, a memorandum of understanding on local currency transactions involving Bank Indonesia, the People's Bank of China and the Hong Kong Monetary Authority was signed, according to a Thursday release by Bank Indonesia. The agreement aims to promote the use of local currencies in trade and investment, improve transaction efficiency, and support deeper regional financial integration.The two central banks also launched the Indonesia-China cross-border QR payment system, while Bank Mandiri (IDX:BMRI) was designated as a direct participant in China's Cross-border Interbank Payment System to streamline clearing and settlement processes.Bank Indonesia and the People's Bank of China also signed another MoU to establish a Renminbi clearing arrangement in Indonesia, which is expected to ensure sufficient liquidity for trade, investment and financial activities.

Fitch Retains Neutral Outlook on Asia-Pacific Insurance Sector

Fitch Ratings has kept a neutral outlook for the Asia-Pacific insurance sector, according to a recent release.Solid capital buffers, controlled underwriting, and improved asset-liability management mitigate market headwinds, modestly increasing claim inflation, and new regulatory solvency regimes, according to Fitch.Moderately higher claim costs, along with supply chain disruption from geopolitical tensions, have reduced nonlife underwriting margins in the region, Fitch said.Increasing health and motor losses pressure profitability in Korea and Indonesia, while home and motor repair costs show stickiness in Australia, the rating agency said.Rising interest rates, a better reinsurance environment, and prior-period pricing actions offset claim inflation, but late-cycle market and credit risk linger, Fitch said.Japanese insurers face higher capital requirements through a new economic value-based solvency regulation, while Indonesian counterparts are undergoing the first phase of higher minimum equity requirements, according to Fitch.Meanwhile, lingering structural issues led to a deteriorating outlook in China and Taiwan, the rating agency said.

ST Telemedia GDC Expands Jakarta Data Center Campus with Four New Facilities

ST Telemedia Global Data Centres has expanded its Jakarta data center campus with the launch of STT Jakarta 2, the topping out of STT Jakarta 3, and the groundbreaking of STT Jakarta 5 and STT Jakarta 6, according to a Wednesday news release.The projects form part of the company's strategy to have a pipeline of more than 360 megawatts of AI-ready IT capacity in Indonesia.STT Jakarta 2 has already commenced operations with 24MW of IT load capacity, while STT Jakarta 3 will further expand the campus once finished.Meanwhile, STT Jakarta 5 and STT Jakarta 6 represent the next phase of development, with each facility planned to support 40MW of IT load.The campus will leverage NVIDIA's Vera Rubin and Vera Rubin Ultra platforms to conduct high-density AI workloads.Indonesia's digital economy is forecasted to reach $130 billion this year, with AI serving as a key driver, the statement said.

Indonesia's Retail Sales Seen Down 0.9% in May

Indonesia's retail sales are projected to decline 0.9% in May from the previous month, improving from the 11.6% contraction recorded in April, according to Bank Indonesia's Retail Sales Survey released on Thursday.The Real Sales Index (RSI) for May is estimated at 225, supported by continued annual growth in sales of spare parts and accessories, other household equipment, and other goods.The central bank attributed the performance to consumer demand during the Ascension Day, Eid al-Adha, and Vesak Day holidays.

Market Chatter: Indonesia Investigates Malayan Banking on Financial Irregularities with Salim Group

Indonesian authorities on Wednesday questioned Malayan Banking's (KLSE:MAYBANK) staff over suspected financial irregularities with Salim Group's palm-oil-manufacturing subsidiary Salim Ivomas Pratama (IDX:SIMP), Bloomberg News reported Wednesday, citing people familiar with the matter.The bank is suspected of understating the actual amount of export inflows into the group, the report said.Authorities will investigate if some goods are invoiced below their ​market price to hide profits and lower ​taxes, the report said.Maybank Indonesia has relatively limited exposure to Salim Ivomas Pratama, with outstanding loans of about 150 billion rupiah, according to the report.However, the bank has a long banking relationship with the broader Salim Group. It remains unclear whether regulators have also questioned other banks associated with the group, Bloomberg said.(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

Tight Supply to Anchor Asia-Pacific Aluminum Producers' Margins, Fitch Says

Asia-Pacific's aluminum smelters should maintain robust margins amid higher metal prices due to a narrower supply of global primary aluminum, Fitch Ratings said in a recent release.The rating agency expects low-cost firms in China, India, and Indonesia to gain the most due to controlled cost inflation amid their integrated raw material framework and relatively steady power costs.Aluminum prices have increased about 20% since the start of the Middle East conflict, leading to tighter global primary aluminum supply.Fitch believes Asia-Pacific smelters that can retain output and control costs will see a boost in earnings and cash flow under rising aluminum prices.The region's producers are less exposed to imported gas and spot raw material volatility, giving them clearer advantages compared to global peers, Fitch said.

Indonesian Consumer Confidence Falls in May

Indonesia's Consumer Confidence Index fell to 120.9 points in May from 123.0 points in the previous month, according to the Bank Indonesia consumer survey released Wednesday.The index remained in optimistic territory, sitting above the 100-point threshold that separates optimism from pessimism.The shift was driven by a fall in the Current Economic Condition Index, which slid to 112.2 points from 116.5 points, while the Consumer Expectation Index tracking future outlook increased to 129.7 points from 129.6 points.

Singapore, Indonesia Agree on Digital, Green Economy Frameworks

Singapore's Deputy Prime Minister, Gan Kim Yong, confirmed the city-state's negotiations with Indonesia on a digital economy framework agreement, according to a release from the Singapore Productivity Center on Tuesday.The signing is expected to be done by 2026, with entry into force slated for 2027, as the two states look to leverage the AI and digital economy boom.Additionally, the two states are exploring a similar understanding for the green economy, focused on green electrons, green financing, carbon credit trading and other green solutions across the region.

Market Chatter: Indonesia Gets US Tariff Exemptions for Spare Parts, Plantation Commodities

Indonesia has secured tax exemptions from the US for various commodities, including spare part and plantation commodity exports, The Jakarta Globe reported Monday, citing Chief Economic Minister Airlangga HartartoThe news came following talks between Hartarto and Trump administration's trade chief, Jamieson Greer, in Paris.The Trump administration recently proposed a new tariff of 10% on Indonesia over allegations that it failed to stop inflows of goods made by forced labor. This, coupled with a separate probe on excess capacity, could push tariffs on Indonesia to 18%, according to the report.(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

Indonesia's Central Bank Raises Interest Rates by 25 Basis Points in Surprise Move

In a surprise move, Bank Indonesia on Tuesday raised interest rates by 25 basis points to stabilize the rupiah.The interest-rate hike takes the central bank's benchmark to 5.50% after the rupiah hit a record low near 18,190 per US dollar.The deposit facility interest rate has been raised by 25 bps to 4.50%, and the lending facility interest rate by 25 bps to 6.25%.

Bank Indonesia Delivers Off-Cycle 25 Basis-Point Rate Hike

Market Chatter: Indonesia Eyes Ratification of EU Trade Deal by Year-End, Launch in 2027

Indonesia is looking to officially launch its Comprehensive Economic Partnership Agreement (CEPA) with the European Union (EU) at the start of 2027 following ratification by the end of 2026, The Jakarta Globe reported June 7.The update came after Indonesia's Coordinating Economic Affairs Minister Airlangga Hartarto and European Union Trade Commissioner Maros Sefcovic met in Brussels the prior week, according to the report.The agreement aims to broaden Indonesia's access to the European market and eliminate tariffs on the majority of exports.The EU's Global Gateway initiative was also the subject of the talks in Brussels, under which strategic projects in critical minerals and related industries, as well as others, will receive support, The Jakarta Globe said.(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

Asia Week Ahead: Inflation Prints; GDP Estimates; and Trade Balance

For the week ahead in Asia, inflation, trade and growth data will be in focus as investors assess the region's economic momentum.The week opens with Japan's revised first-quarter GDP figures, followed by trade data from China and Taiwan on Tuesday.Mid-week, China's consumer and producer inflation reports will dominate headlines, while Japan will release producer price data.Thursday will be led by unemployment figures from South Korea and Malaysia, before Friday brings India's inflation report.Here's what to watch in the week ahead.MONDAY, June 8The week was off to a relatively light, but notable start with Japan's first-quarter GDP growth rate.Japan's economy expanded at an annualized rate of 1.8% in the first quarter, according to final data released by the Cabinet Office. The reading was revised down from the preliminary estimate of 2.1% growth, but exceeded the market consensus forecast for a 1.3% increase, according to Trading Economics.The data comes as attention turns to the Bank of Japan's June 15-16 policy meeting, where policymakers are expected to consider another interest-rate increase. The growth figures are unlikely to derail expectations for further policy tightening.TUESDAY, June 9Data readouts will pick up Tuesday, starting with China's trade figures for May.Economists at ING said they expect China's exports to rise 19.5% year-on year and imports to gain 36.4% for a trade surplus of $86.5 billion. The surplus would be an increase from the $84.8 billion recorded in April, thanks in part to higher tech prices, which are boosting both export and import prices, ING said.Taiwan will similarly report trade figures, with ING expecting the island nation's trade surplus to rise to $15.5 billion from $14.4 billion in April. "Strong export orders from previous months suggest external demand remains robust amid the AI boom," ING said in a preview.Markets will be watching for any revisions to South Korea's first-quarter GDP growth rate when the Bank of Korea releases its final estimate on Tuesday.The central bank's advance estimate indicated that South Korea's real GDP increased 3.6% annually and 1.7% on a quarterly basis.In Australia, a pair of reports will capture business and consumer sentiment, while in the Philippines, unemployment stats will be due.Other key data scheduled for the day include Japan's machine tool orders.WEDNESDAY, June 10China's consumer and producer price inflation will dominate headlines Wednesday.Consumer prices are expected to show an uptick of 1.3% year on year in May from 1.2% a month prior, reflecting higher manufacturers' input and output prices due to the Middle East conflict, the Wall Street Journal reported.Japan will similarly report its May producer prices, with analysts expecting the PPI to accelerate to 5.5% year on year from 4.9% in April, according to a Trading Economics consensus.Indonesia will release its May consumer confidence report on the same day.THURSDAY, June 11Unemployment data from South Korea and Malaysia will be the highlight of the day.According to Trading Economics, South Korea's unemployment rate could remain unchanged at 2.80% in May. The platform similarly forecasted that Malaysia's unemployment would remain steady at 2.90%, a level it has held since November 2025.A forward-looking report on consumer inflation expectations will be due in Australia. According to Trading Economics, consumer inflation expectations could rise to 6.5% for June from the 5.6% estimated in May.Meanwhile, Indonesia will report its retail sales stats for April.FRIDAY, June 12India's May inflation data will be in the news Friday.Economists at ING said they expect consumer prices to pick up to 3.9% year on year from the 3.48% recorded in the month prior due to a rise in gasoline prices. Still, the figure would be below the Reserve Bank of India's 4% target."The key risk to the outlook lies in potential second-round effects on food inflation. Fertiliser shortages, alongside the rising probability of an El Niño event, could exert upward pressure on food prices in the coming months and warrant close monitoring," ING said in a preview.Friday will also feature industrial production reports from Japan, Malaysia, and Hong Kong, with Malaysia additionally reporting its retail sales stats for April.In Thailand, the consumer confidence report for May will be due.On the activity front, the Business NZ manufacturing purchasing managers' index report will be due in New Zealand. CommBank said it expects manufacturing activity in May to stabilize, or even lift somewhat, given a decline in fuel prices over late April and May.The Business NZ PMI previously dropped to 50.5 in April from 52.8 in March.

Update: Indonesia's Forex Reserves Fall to $144.9 Billion in May

(Updated to add context)Indonesia's foreign exchange reserves fell to $144.9 billion at the end of May from $146.2 billion at the end of April, according to data released by Bank Indonesia on Monday.The decline reflected government external debt repayments and Bank Indonesia's efforts to stabilize the rupiah amid heightened uncertainty in global financial markets and seasonal domestic demand for foreign currency. The impact was partly offset by proceeds from the government's global bond issuance, as well as by tax and service receipts.