The week ahead – Inflationary pressure, Singapore CPI, GDP, Monetary policy decisions

Inflationary pressure

INFLATION data for April 2022, which will be the key focus this week, is expected to remain at around 2%.

Malaysia's consumer price index (CPI) in March 2022 rose 2.2% to 125.6 against 122.9 in March 2021, surpassing the average inflation for the January 2011 to March 2022 period which stood at 1.9%.

Bloomberg estimates a 2.2% growth year-on-year (y-o-y) unchanged from March. Analysts said that besides energy, food and material prices, domestic price pressures are on an uptrend.

The inflation rate in Malaysia is expected to be 2.8% by the end of this quarter, according to Trading Economics' global macro models and analysts' expectations. Meanwhile, Bank Negara is expected to announce its international reserves as at May 13 this week.

In addition, this week will also see some huge names reporting their first-quarter financial performance, including Kuala Lumpur Kepong Bhd , Axiata Group Bhd , MISC Bhd , Telekom Malaysia Bhd , Bumi Armada Bhd , Genting Plantations Bhd and Petronas Dagangan Bhd .

Singapore CPI, GDP

SINGAPORE'S core inflation will likely move past 3% as price pressures stay elevated, according to ING.

It said accelerating core inflation was one of the main reasons for the Monetary Authority of Singapore's tightening, although it believes inflation should moderate by the second half of the year.

Meanwhile, Singapore will release its final print for its first-quarter gross domestic product (GDP) on Wednesday.

Bloomberg median estimate suggested an improved 3.7% y-o-y print in the first quarter from the advance estimate of 3.4% y-o-y.

UOB Global Economics & Markets Research estimates first-quarter GDP will be revised higher to 3.6% based on the better-than-expected March industrial production rise of 3.4% y-o-y.

Monetary policy decisions

BANK Indonesia (BI), Reserve Bank Of New Zealand (RBNZ) and Bank of Korea (BoK) are expected to meet this week.

According to a Bloomberg poll, among all the 13 economists polled, 10 expect BI to keep the seven-day reverse repo rate unchanged at 3.50% but there were three that expect a 25-basis-point (bps) hike to 3.75%.

UOB continues to hold its forecast that BI will hold its benchmark rate unchanged in the first-half of 2022 and start hiking only in July 2022.

ING expects the BoK to deliver a 25 bps rate hike while BI will likely keep rates unchanged.

UOB said South Korea's inflation continued to climb in April with the headline CPI above 4% for the second straight month at 4.8% y-o-y, the highest since October 2008.

UOB thinks a back-to-back 25 bps interest rate hike to 1.75% on May 26 is fairly likely, given the near-term inflationary pressures since there will not be an Monetary Policy Committee meeting in June and the next meeting will only be in July.

S&P Global said while the RBNZ may continue on its rate hike cycle, and BI could pave the way for its first hike in June, the BoK will be watched with heightened uncertainty after the new central bank chief suggested that a 50-bps hike should not be ruled out.