MNI ASIA PAC Weekly Macro Wrap:

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Executive Summary:

JAPAN 

• The BoJ decided to keep its policy rate unchanged at 0.50%, a move fully expected by markets and consensus economists. The decision was made by a unanimous 9-0 vote. From the second quarter of 2026 through the first quarter of 2027, the BoJ will slow the pace of QT to ¥200 billion per quarter, a decision backed by an 8-1 vote.
• On May inflation, our Japan policy team noted, "Services prices, a key BOJ focus for assessing the strength of the wage-price cycle, rose 1.4% y/y in May, slightly up from 1.3% in April, but remained below the 2% mark, indicating weak momentum and the need for further gains to achieve the BOJ's inflation target sustainably."

AUSTRALIA 

• Employment fell 2.5k but full-time jobs increased 38.7%, hours worked rose sharply and underemployment fell. The unemployment rate was stable at 4.1%, the fifth straight month. The data is consistent with the RBA remaining cautious.
• A decision will be made at the July 8 RBA monetary policy meeting on the publication of anonymous votes.

NEW ZEALAND

• Q1 NZ production-based GDP rose 0.8% q/q resulting in the annual rate falling 0.7% but up from -1.3% in Q4. Expenditure GDP rose 0.9% q/q, the fastest since Q2 2023, to be down 0.2% y/y after -1.1% in Q4. Growth in Q1 was fairly broad based and substantially above the RBNZ’s May forecast.
• Monthly price data was mixed in May with food, power, accommodation and alcohol seeing a rise in inflation, while air travel, rents and petrol fell. The series released account for 46.5% of the quarterly CPI.
• The Q1 current account deficit eased to 5.7% of GDP down from 6.1%, the lowest since Q3 2021 and 3.5pp less than the Q4 2022 peak. 

SHORT TERM RATES 

• Interest rate expectations across dollar-bloc economies are broadly firmer over the past week, with all markets showing net changes of 5-10bps through December 2025.

CHINA

• China’s new and used home prices turned down again in May. China's Residential Property Sales and Property Investment YTD also turned down again. Property Investment YTD YoY declined -10.7% in May, from -10.3% in April and the worst result in over five years.
• The retail sales figures for May confirm the strength of the consumer that supports an improving domestic economy. While for a second consecutive month, China's industrial production grew less than the prior month. It peaked in March just prior to the implementation of tariffs at +7.7%, May was lower at +5.8%.

ASIA 

• Thailand’s customs exports rose 18.4% y/y in May from 10.2%, due to frontloading of shipments to the US. Imports rose 18% y/y from 16.1%, likely boosted by imports from China rerouted on their way to the US.

ASIA EQUITY FLOWS 

• Aggregate equity inflow momentum has struggled the past week, amid increased Middle East geopolitical tensions.