Singapore: on hold, possibly in October as well - ANZ

Irene Cheung, analyst at ANZ, notes that as per the expected lines, the MAS has maintained its modest and gradual S$NEER appreciation policy, keeping the slope, width, and centre of the policy band unchanged at today’s semi-annual policy review.

Key Quotes

“The tone of the policy statement was downbeat, highlighting easing growth which has helped cap inflation pressure. While the growth forecast for this year is kept unchanged at slightly below the midpoint of a 1.5-3.5% range, the central bank downgrades its core inflation forecast to 1-2% from 1.5-2.5%. We had anticipated this revision. All said, the central bank still mentioned a positive output gap which is expected to narrow, given the slightly below potential growth this year.”

“Based on the MAS’s current assessment, we see a good chance that the central bank will be on hold again in October. An easing is unlikely unless the positive output gap disappears, while an improvement in the growth outlook could open the door for tightening further down the road.”