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Week ahead for Asia: BOJ decision, China PMI

The spotlight in Asia-Pacific this week will fall on Japan, with the country's central bank due to hold its first monetary policy meeting since the April consumption tax hike.

Investors will also get a health-check on China's economy, with the release of manufacturing data for April.

The Bank of Japan is widely expected to keep its monetary policy steady on Wednesday. "It's too early to expect further easing from the Bank of Japan Wednesday as not enough data has been seen post the sales tax hike, but it is likely to signal that it stands ready to act if needed," said Shane Oliver, head of investment strategy and chief economist at AMP Capital.

Japanese industrial production (Wednesday), household spending and employment data (Friday) for March will be a bit dated given the consumption tax hike on April 1.

Read MoreIs Japan winning the war against deflation?

Economists expect the central bank will step up monetary stimulus in the second half of the year to offset the negative drag on the economy from the tax increase.

The BOJ has stood pat on policy since delivering unprecedented stimulus in April last year, pledging to double base money via aggressive asset purchases to accelerate consumer inflation to 2 percent in roughly two years.

Bloomberg | Getty Images

In China, the official manufacturing purchasing managers' index (PMI) is scheduled to be published on Thursday.

The flash HSBC PMI, released last week, came in at 48.3, better than the final reading of 48 in March, but still below the 50-mark which demarcates expansion and contraction.

Read MoreChina April HSBC flash PMI ticks up, but still in contraction

"Thanks to the mini-stimulus in China and some possible recovery in export demand, we expect the HSBC PMI to gradually move to the range of 49-50 in coming months. While the official PMI will likely move to the range of 50.5-51.0," Ting Lu, chief China economist at Bank of America Merrill Lynch wrote in a last week.

In early April, Beijing acted to arrest a slowdown in the world's second-largest economy by announcing plans to accelerate spending on railways, upgrade housing for low-income households and lower tax rates for smaller companies.

Events outside Asia are also likely to be in focus for regional markets this week, with the Federal Open Market Committee's (FOMC) meeting to be held on Wednesday-Thursday.

The central bank is expected to continue the process of tapering by reducing its bond buying program by another $10 billion taking it to $45 billion a month, and is likely to express confidence that growth is picking up in line with its expectations after a soft patch through winter, said Oliver.

Investors will also be keeping a close eye on geopolitical developments in Eastern Europe as tensions between Russia and Ukraine escalate.

Read MoreUkraine forces kill rebels; Russia starts military drills

At the end of last week, U.S. Secretary of State John Kerry said time was running out for Moscow to change its course in Ukraine.

Ukrainian forces killed up to five pro-Russia separatists on Thursday and Russia conducted army drills near the border, raising fears its troops would invade.

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