Korea reports December current account data Monday. The external accounts are in good shape, with another solid trade surplus reported for January. Price pressures remain low, giving the BOK leeway to hike very cautiously. Next policy meeting is February 27 and rates are likely to be kept steady at 1.5%.
Turkey reports January CPI Monday, and is expected to rise 10.6% y/y vs. 11.9% in December. While this would still be above the 3-7% target range, the bank will be happy inflation decelerates for the second straight month. This will allow the bank refrain from hiking further. Turkey then reports December IP Thursday, which is expected to rise 6.8% y/y vs. 7.0% in November.
Hungary reports December retail sales Monday, which are expected to rise 6.4% y/y vs. 6.7% in November. It then reports December IP Wednesday, which is expected to rise 5.0% y/y WDA vs. 3.4% in November. The economy remains robust, but the central bank is still leaning dovish and may ease further via unconventional measures. December trade will be reported Friday.
Colombia reports January CPI Monday, which is expected to rise 3.77% y/y vs. 4.09% in December. If so, it would be the lowest since July 2017 and back within the 2-4% target range. Central bank minutes will be released Friday. At last week’s meeting, the bank cut rates 25 bp, as expected. Minutes will be studied clues on future policy, but we expect further easing in 2018.
Philippines reports January CPI Tuesday, which is expected to rise 3.6% y/y vs. 3.3% in December. If so, inflation would still be in the 2-4% target range. Bangko Sentral ng Pilipinas then meets Thursday and is expected to keep rates steady at 3.0%. Bank officials have stressed that they are in no hurry to hike rates.
Czech Republic reports December industrial and construction output and retail sales Tuesday. Sales are seen rising 3.0% y/y, while industrial output is seen rising 3.7% y/y. The economy remains robust, which is why the central bank continued to normalize policy with a 25 bp hike to 0.75% last week.
Taiwan reports January CPI Tuesday, which is expected to rise 1.0% y/y vs. 1.2% in December. While the central bank does not have an explicit inflation target, low price pressures should allow it to remain on hold for much of this year. Taiwan then reports January trade Wednesday. Exports are expected to rise 17.3% y/y and imports by 11.9% y/y.
China reports January foreign reserves Wednesday, and are expected to rise for a twelfth straight month to $3.17bn. January trade data will be reported Thursday. Exports are expected to rise 11.3% y/y and imports by 11.2% y/y. CPI and PPI will be reported Friday. The former is expected to rise 1.5% y/y and the latter by 4.2% y/y, both slowing from December.
Reserve Bank of India meets Wednesday and is expected to keep all rates steady. CPI rose 5.2% y/y in December, which is in the upper end of the 2-6% target range. The RBI has signalled no further easing, and this will likely be reinforced by the government’s expansionary fiscal policy planned for FY2018/19.
Chile reports January trade Wednesday. It then reports January CPI Thursday, which is expected to rise 2.0% y/y vs. 2.3% in December. If so, it would be right at the bottom of the 2-4% target range. While the central bank has signalled an end to the easing cycle, low inflation would give it cover to resume rate cuts if the economic outlook worsens.
National Bank of Poland meets Wednesday and is expected to keep rates steady at 1.5%. CPI rose 2.1% y/y in December, which is in the bottom half of the 1.5-3.5% target range. The bank continues to signal no rate hikes this year, which will likely be tested by the robust economy and rising wage pressures.
Brazil’s COPOM meets Wednesday and is expected to cut rates 25bp to 6.75%. Brazil reports January IPCA inflation Thursday, which is expected to rise 2.99% y/y vs. 2.95% in December. With inflation pressures rising, this should be the last cut in the cycle. December retail sales will be reported Friday.
South Africa reports December manufacturing production Thursday, which is expected to rise 1.8% y/y vs. 1.7% in November. The economy remains weak but SARB has kept rates on hold since July. Next policy meeting is March 28. If the rand remains firm, SARB may resume the easing cycle to help address the sluggish economy.
Mexico reports January CPI Thursday, which is expected to rise 5.51% y/y vs. 6.77% in December. Later that day, Banco de Mexico meets and is expected to hike rates 25 bp 7.5%. On Friday, Mexico reports December IP and is expected to contract -0.7% y/y vs. -1.5% in November.
Russia reports January CPI Thursday, and is expected to rise 2.3% y/y vs. 2.5% in December. If so, this would be further below the 4% target. Central Bank of Russia meets Friday and is expected to cut rates 25 bp to 7.5%. Later that day, Russia reports December trade.
Peru central bank meets Thursday and is expected to keep rates steady at 3.0%. January CPI rose 1.3% y/y, which was the lowest since May 2010 and near the bottom of the 1-3% target range. Still, the bank has been cutting rates every other meeting during this easing cycle. Since it just cut rates in January, the bank seems likely to stand pat this month and then cut again in March.
Check out the EM Preview for the Week Ahead and other musings on Emerging Markets at BBH’s “Mind on the Markets” blog.
