MNI ASIA PAC Weekly Macro Wrap:

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Executive Summary:

JAPAN 

• Inflation prints this week point to on-going momentum, particularly from a core standpoint. Labor market conditions remain tight as well. 

AUSTRALIA 

• April headline inflation was unchanged at 2.4% y/y, slightly higher than expected, while the trimmed mean picked up 0.1pp to 2.8% y/y. Underlying inflation has been sitting around 2.7/2.8% since December and the RBA expects 2.6% for Q2, which is released on July 30. CPI ex volatile items & holiday travel rose 0.3% m/m seasonally adjusted to be up 2.8% y/y after 2.6% y/y in March.
• Q1 private capital expenditure volumes were weaker than expected falling 0.1% q/q to be down 0.5% y/y driven by a contraction in machinery & equipment investment. Q1 GDP prints on June 4 with the inventory and net export components released on June 3, but currently it is looking soft.

NEW ZEALAND

• The RBNZ cut rates 25bp to 3.25% following a vote, the first in two years, that included an option to leave rates unchanged. The vote wasn’t unanimous with one dissenter but Governor Hawkesby said that there was consensus around the projections. Hawkesby reiterated that the message at yesterday’s press conference was not to assume that a July rate cut is programmed into the MPC’s thinking.
• ANZ business confidence fell to 36.6 in May from 49.3, the lowest since July, while the outlook moderated to 34.8 from 47.7. ANZ notes though that the breakdown of responses indicates that the picture is not as soft as the month averages suggest as they improved in the latter part of the month.

SHORT TERM RATES 

• Interest rate expectations across dollar-bloc economies were mixed through December 2025 over the past week, with New Zealand as the outlier. Canada and Australia saw the most significant shift, with around a 10bp softening in expected year-end rate. The US rate saw a 2bp softening, while New Zealand saw a 101bp firming.

SOUTH KOREA 

• The BoK cut rates by 25bps, as widely expected, taking the policy rate to 2.50%. It maintained a clear easing bias noting in its statement: "the Board will maintain its rate cut stance to mitigate downside risks to economic growth and adjust the timing and pace of any further Base Rate cuts while closely monitoring changes in the domestic and external policy environments."

ASIA EQUITY FLOWS 

• After an exceptional period of inflows into the major markets, it appears that this trend has stalled for now as constant daily flows are interrupted with outflows, with Taiwan the latest to experience a significant outflow yesterday.

GLOBAL 

• The US Court of International Trade blocked most of the proposed tariffs saying that the President had overstepped his authority, which has now put most of the US tariffs on hold but the administration has appealed the decision.