MNI ASIA PAC Weekly Macro Wrap:

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Executive Summary:

JAPAN 

• The expected new PM Takaichi has been vocal in her criticism of BoJ policy hikes in the past, although the stance softened during this recent LDP leadership campaign.
• August labour earnings data in Japan was comfortably below market expectations. Real earnings have not been in positive territory (in y/y terms) so far in 2025. This will reinforce expectations of the BoJ likely remaining on hold at the Oct meeting. Japan's new political regime had already noted that Oct is too soon.
• As the week progressed FX rhetoric/jawboning picked up as USD/JPY rallied through 153.00. 

AUSTRALIA 

• Westpac consumer confidence fell for the second straight month in October as higher inflation prints appear to have weighed on assessments of family finances and the economy.
• Both MI’s inflation gauge for September and consumer inflation expectations for October picked up consistent with the RBA being cautious about the inflation outlook.

NEW ZEALAND

• All MPC members agreed that the 50bp to 2.5% was appropriate given material spare capacity in the economy. As this negative output gap is likely to persist for some time and the economic recovery remains lacklustre, further cuts bringing policy into stimulatory territory are likely.
• The NZIER’s Quarterly Survey of Business Opinion showed a deterioration in the assessment of the outlook and only 4% of firms expecting to hire in Q4. A net 15% believe that economic conditions will improve over the coming months down from 26%, which is concerning given 250bp of easing.

SHORT TERM RATES 

• Interest rate expectations across the $-bloc have shown little net change over the past week, except in NZ, which softened sharply (-12bps) following the RBNZ’s 50bp cut.

CHINA 

• China markets were out for much of this week. FX reserves data showed a continued trend towards gold. The USD/CNY fixing bias lent against yuan depreciation pressures. 

ASIA 

• The Bank of Thailand (BoT) surprised by leaving rates at 1.5% but Wednesday’s decision wasn’t unanimous with two MPC members voting for a 25bp cut. Given its limited policy space, it the MPC wants to time further easing.
• Indonesian consumer confidence fell for a second straight month to 115.0 in September from 117.2, the lowest since April 2022. Private consumption growth been steady around 5% for around two years but the 1.8% q/q drop in Q3 average consumer sentiment is signalling that it likely slowed last quarter.
• The Philippines central bank surprised markets by cutting rates. It highlighted political turmoil (which is weighing on the growth outlook) as a key driver of the decision.