Asia hinges on central bank actions this week

Asian markets seesawed last week amid speculation over the timing of a Federal Reserve interest rate hike and as central banks in South Korea and Thailand announced surprise interest rate cuts.

In the week ahead, markets may face more volatility with a string of central bank actions on tap.

U.S. Federal Reserve
Brendan Smialowski | Bloomberg | Getty Images
U.S. Federal Reserve

What will Fed do?

A mixed bag of economic data – ranging from stronger-than-expected nonfarm payrolls to weather-distorted retail sales figures for February – sent conflicting signals over when the U.S. central bank will begin raising rates. As the Fed's policy committee convenes for its monthly two-day policy meeting on Tuesday, analysts expect the world's most influential central bank to remove its "patient" promise, opening the door for a discussion about raising interest rates this year.

"We'll see a language change in the Fed's statement. It will drop the 'patient' language and move on to a meeting-to-meeting notion as to when they might hike rates," HSBC's FX strategist Dominic Bunning told CNBC last Friday. "We are still looking for [the rate increase to be] September. We've seen some disappointing data, but that's compared to relative expectations, which have been improving."

Easing bandwagon: Japan, Indonesia to join next?

The week also brings monetary policy decisions from the Bank of Japan (BOJ) and Bank Indonesia (BI) on Tuesday.

The BOJ is set to maintain its pace of quantitative easing, while its Indonesian counterpart will likely hold rates steady after pulling off an unexpected easing move in February, according to a Reuters poll.

Last month, BI surprised markets by cutting rates for the first time in three years, taking advantage of an oil-induced slowdown in inflation to ease monetary policy so as to spur economic growth.

"Inflation continues to weaken on account of cheaper oil, while Indonesia's external position remains strong thanks to continued capital inflows. BI is unlikely to be too concerned about the rupiah's recent depreciation as it will boost the struggling export sector," analysts from Moody's Analytics wrote in a note.

As the BOJ's 2 percent inflation target remains elusive, the central bank may be forced to increase its already massive stimulus package later in the year, experts say.

"The BOJ will likely increase the asset purchasing program in the second half of this year, particularly with low oil prices exerting a lot of disinflationary effect on the consumer price index which makes it harder for them to reach their target," Stephen Sheung, head of investment strategy at SHK Private, said.

Read MoreThe real surprise with Asia easing? More coming

Data watch

On the economic data front, Asia's calendar is fairly busy. The week begins with India's wholesale price index (WPI) for February, which is seen falling to "nonexistent" levels as falling fuel and power costs offset higher food inflation, noted Moody's Analytics. This leaves room for the Reserve Bank of India to cut interest rates once again to encourage investment and stimulate growth.

Singapore's non-oil domestic exports for February are scheduled on Tuesday, while Japan releases trade data for the same month before Wednesday's market open.

New Zealand, dubbed as last year's "rockstar economy," is seen growing 0.8 percent on-quarter in the October-December period, a tick higher than the 0.7 percent in the preceding quarter, bringing growth to 3.1 percent for all of 2014, according to Moody's Analytics.