EM Preview for the week ahead – BBH

Marc Chandler, Global Head of Currency Strategy at BBH elaborates on a list of events due on the cards from the key Emerging Markets (EM) economies in the week ahead.

Key Quotes:

“Thailand reports March CPI Monday, which is expected to rise 0.97% y/y vs. 0.42% in February.  If so, it would be the highest rate since November but still below the 1-4% target range.  Low inflation should allow the central bank to remain on hold for much of this year.  Next policy meeting is May 16, rates are likely to be kept at 1.5% then. 

Indonesia reports March CPI Monday, which is expected to rise 3.35% y/y vs. 3.18% in February.  If so, it would still be near the bottom of the 3-5% target range.  Low inflation should allow the central bank to remain on hold for much of this year.  Next policy meeting is April 19, rates are likely to be kept at 4.25% then. 

Korea reports March CPI Tuesday, which is expected to remain steady at 1.4% y/y.  If so, it would remain well below the 2% target.  Low inflation should allow the central bank to hike rates slowly this year.  Next policy meeting is April 12, rates are likely to be kept at 1.5% then.  Korea reports February current account Thursday. 

Turkey reports March CPI Tuesday, which is expected to rise 10.0% y/y vs. 10.3% in February.  If so, it would be the lowest rate since July 2017 but still well above the 3-7% target range.  Falling inflation should keep the central bank on hold for much of this year.  Easing is most likely a 2019 story.  Next policy meeting is April 25, rates are likely to be kept steady then. 

Brazil reports February IP Tuesday.  The economy continues to recover, while price pressures remain low.  Central bank minutes suggest risks of persistent below-target inflation as well as room for further easing.  Markets are pricing in another 25 bp cut to 6.25% at the next COPOM meeting May 16. 

Philippines reports March CPI Thursday, which is expected to rise 4.7% y/y vs. 4.5% in February.  If so, it would be the highest rate since August 2014 and further above the 2-4% target range.  Rising inflation and a strong economy should force the central bank to start a tightening cycle soon.  Next policy meeting is May 10, and we think a 25 bp hike then is becoming more likely. 

Reserve Bank of India meets Thursday and is expected to keep rates steady.  CPI rose 4.4% y/y in February, which is in the top half of the 2-6% target range.  This should keep the RBI in hawkish mode, though markets are not pricing in a hike until 2019. 
of a Q3 move. 

Chile reports March CPI Friday, which is expected to rise 1.9% y/y vs. 2.0% in February.  If so, it would be back below the 2-4% target range.  Low inflation should allow the central bank to remain on hold for most of this year.  Markets are starting to price in a hike late this year.  Next policy meeting is May 3, rates are likely to be kept at 2.5% then.“