Experts are suggesting that the Monetary Authority of Singapore (MAS) is likely to keep its current policy parameters intact in its January 2024 monetary policy statement (MPS).
According to UOB Senior Economist Alvin Liew, this prediction is based on the ongoing moderation of core inflation, which is heading toward its long-term historical average of approximately 1.8%.
“We project core inflation to average 2.2% excluding GST in 2024,” Liew stated.
He also suggested that it may be “too soon” to expect the MAS to “reverse some of the tightening in January 2024 given the upside risk to oil prices should the Israel-Hamas conflict widen and/or uncertainty in the extent of passthrough in the upcoming 1%-pt GST hike to 9% next year.”
Lieu also noted, “Thus, our base case calls for no change in January 2024, followed by a slight 50bps reduction in the slope of the S$NEER policy band to an estimated 1.0% in the April 2024 MPS, which could provide some countercyclical effects to support the recovery of the economy back to potential.”
Barnabas Gan, Acting Group Chief Economist of RHB, agreed with this assessment, suggesting that MAS may have concluded its tightening cycle after five consecutive meetings with policy constraints.
“The decision to keep policy parameters unchanged tells us that policymakers see no impetus to tweak monetary policy given growth and inflation in the medium term,” Gan said.
”Barring a sudden and unforeseen deterioration of global economic fundamentals and/or heightened inflation prognosis, we forecast the MAS will keep policy parameters in its meeting in January 2024,” he added.
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