Asia’s corporate and macro calendars are remarkably light on Monday, leaving investors squarely focused on three regional central bank policy decisions later in the week and, most importantly, Jackson Hole.
On Friday, Federal Reserve Chairman Jerome Powell will deliver his keynote address at the Kansas City Fed’s two-day annual economic symposium in the Wyoming retreat. His much-anticipated speech on the economic outlook could indicate how far US borrowing costs can go and how long they will have to stay there to bring down runaway inflation.
US rates market prices predict the Fed will raise rates to a peak around 3.65% early next year, with little changed in the past two weeks. But traders have cut the number of rate cuts they expect between March and December next year to 40 basis points from 60 basis points previously.
That said, some Fed officials have recently pointed to the dangers of raising rates too aggressively. Will Mr. Powell wink at the threat that rising rates pose to growth, or will he rely on the more usual anti-inflation rhetoric?
In Asia, monetary policy is much less belligerent. The central banks of China, South Korea and Indonesia are meeting this week and only one, the Bank of Core, is expected to raise rates.
The People’s Bank of China is expected to cut its one-year prime lending rate by 10bps to 3.60% on Monday, and its five-year rate by a larger margin, as it struggles to support a shaky housing market and a economy ravaged by the Covid.
The BOK is expected to raise borrowing costs by 25 basis points to 2.50% on Thursday, with inflation still above target, and it is unclear whether the Bank of Indonesia is holding its rate at 3.50% or the raised by a quarter point.
As important as these decisions are, all eyes are on Powell Jackson Hole on Friday.