MAS expected to ease monetary policy amid subdued levels of inflation

Victor Kang25 Sep 2019

MAS Singapore

MAS is expected to lower the annual appreciation pace of the SGD NEER policy band from one percent to 0.5 percent. 

Analysts expect that against benign inflationary pressures, the Monetary Authority of Singapore (MAS) will ease monetary policy to prop up the slowing economy, reported Singapore Business Review.

In August, core inflation reached 0.8 percent at a similar pace to July although staying at a three-year low. Similarly, headline inflation only grew slightly from 0.4 percent in the past month to 0.5 percent.

This informs the expectations by analysts for the central bank to ease policy during its policy meeting by middle of October.

“The fact that core inflation remains persistently below the medium-term historical average of just under two percent may persuade MAS to loosen monetary policy in its upcoming policy meeting,” said Barnabas Gan, economist at UOB.

Echoing the same sentiment, Chua Hak Bin, analyst at Maybank Kim Eng, expects the MAS to lower the band’s slope.

“MAS may reduce the slope slightly rather than to zero, as Singapore likely escaped a technical recession in 3Q19,” he said.

MAS is expected to lower the annual appreciation pace of the SGD NEER policy band from one percent to 0.5 percent, according to DBS senior economist Irvin Seah.

“An outsized accumulated surplus of about $15.6 billion implies ample room for aggressive fiscal support for the economy. We expect a highly expansionary fiscal policy early next year,” he noted.

Looking to buy a Singapore home but not sure where to start? Get insight on the best locations for your new home with our AreaInsider Guides.

Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg

POST COMMENT

You may also like these articles

MAS: Exercise caution in taking up housing loans

Home buyers should remain prudent in their buying decisions on the back of rising interest rates and the upcoming supply of new homes.While the recent curbs had slowed the pace of property price hikes

Continue Reading26 Nov 2018

Economists lower growth forecast for Singapore again, MAS survey

The pessimistic outlook comes as the economy grew 1.2 percent in the first quarter of 2019, which was significantly lower compared to the 1.9 percent forecast in the March survey. The median forecasts

Continue Reading13 Jun 2019

2019 growth forecast for Singapore’s economy slashed to 0.6%

The economists expects year-on-year growth to come in at 0.3 percent in the third quarter, citing escalating US-China trade tensions as well as further slowdown in China as top concerns.Private-sector

Continue Reading5 Sep 2019