MUFG analysts Lin Li, Michael Wan, Lloyd Chan and Khang Sek Lee highlight an Asia‑centric week dominated by geopolitics, inflation and monetary policy. They expect the Bank of Korea to keep rates on hold through 2026, the Bank of Thailand to cut by 25bps, and China’s loan prime rates to stay unchanged pending clearer policy guidance in March.
Asia policy signals drive FX outlook
“The coming week is heavily Asia‑centric, with geopolitics, inflation dynamics and monetary policy in focus across the region.”
“In particular, we expect the Bank of Korea to keep rates on hold with the tone likely to indicate an extended policy rate hold through 2026 given rising house prices and a volatile won, while the BOK’s growth forecasts could also be upgraded in the meeting.”
“Meanwhile, we expect the Bank of Thailand to cut rates by 25bps given negative inflation and a generally weak growth outlook notwithstanding better relative clarity from the recent election results.”
“We also expect China’s loan prime rates to remain unchanged, with more clarity on China’s monetary policy direction potentially expected after the National Party Congress, Two Sessions and the publication of the full 15th Five-Year Plan in March.”
“Meanwhile, Australia’s January CPI will be the first test following the Reserve Bank’s recent rate hike, with inflation expected to ease but remain above target, reinforcing a hawkish bias while keeping policy on hold.”
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
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