Inflation
THE consumer price index (CPI), scheduled for release this week, is expected to show inflation holding steady at 1.8% year-on-year (y-o-y) in August, unchanged from July 2026, according to economists surveyed by Bloomberg.
Malaysia’s inflation rate is forecast to reach 2.1% by the end of the quarter, based on Trading Economics’ global macro models and analysts’ expectations.
The Statistics Department is also scheduled to release Malaysia’s external trade statistics for August.
A Bloomberg survey expects exports to grow 37.6% y-o-y, while the trade surplus is projected at RM27.4bil.
Trading Economics expects the trade balance to reach RM45bil by the end of the quarter, based on its global macro models and analysts’ expectations.
Meanwhile, Bursa Malaysia will be closed on Sept 16, 2026, in conjunction with the Malaysia Day public holiday.
Monetary policy
SEVERAL economies, including Taiwan, Japan and the United States, are expected to announce their respective interest rate decisions this week.
UOB Global Economics & Markets Research economist Ho Woei Chen expects Taiwan’s central bank (CBC) to keep its policy rate unchanged at 2%, although she noted that the risk of a rate hike has increased.
Stronger-than-expected economic growth, a resilient labour market and continued artificial intelligence (AI)-driven investment have strengthened the case for further tightening, while headline and core inflation remained above the CBC’s 2% target from May to July.
ING, however, expects the CBC to raise its policy rate by 12.5 basis points (bps) although it acknowledged that the decision remains a close call following softer-than-expected August inflation.
It said strong double-digit gross domestic product growth and elevated core inflation and producer price pressures continue to support the case for a rate hike, either in September or December.
Meanwhile, ING expects the Bank of Japan to raise its policy rate by 25 bps to 1.25% on Friday amid persistent price pressures. It expects two further 25 bps hikes in January and April 2027, taking the policy rate to 1.75%.
Japan is also due to release its August inflation data on Friday, with market consensus expecting headline inflation to edge up to 2% y-o-y while core inflation remains unchanged at 1.8%.
China data
CHINA’S industrial production is expected to grow 4.9% y-o-y in August, according to a Bloomberg survey, accelerating from 4.5% in July.
ING expects industrial production to remain resilient, supported by external demand. It also expects property prices in tier-one cities to stabilise, with the improvement gradually spreading to other areas.
On the consumption front, however, ING expects retail sales growth to remain subdued at around 0.7% y-o-y, with consumer loan interest subsidies providing only marginal support.
