Singapore: MAS Tightens - TDS

Mitul Kotecha, Senior Emerging Markets Strategist at TD Securities, notes that Singapore's MAS "slightly" increased the slope of the SGD NEER band while maintaining its width and centre in line with our expectations.

Key Quotes

“We think the MAS moved from a 0.5% slope to 1%.”

“SGD was already trading close to the top of the band. We expect only a small follow through positive reaction from SGD and similarly limited outperformance of SGD rates.”

“The MAS expects core inflation to rise modestly over the near term, with the output gap positive, forecasting core CPI at 1.5-2.0% over 2018 and 1.5-2.5% in 2019.”

“Q3 GDP came in weaker than expected at 4.7% q/q annualised from 1.2% q/q previously. MAS expects a steady expansion path. GDP is expected within the upper half of 2.5-3.5% forecast range in 2018 and to moderate over 2019.”

“The MAS focused on the likely pick-up in inflation rather than being concerned about the recent softening in economic indicators.”