ANZ Look For Aggressive MAS Tightening

ANZ expect the MAS to “tighten aggressively by re-centring upward the midpoint of the policy band to the prevailing level (i.e. a 2% shift) and increasing the slope by 100bp to 2% per annum. Downside growth risks due to geopolitical uncertainties are manageable. Inflation pressures are accumulating and with a tightening in resource pressures in the economy, upside inflation risks mean the MAS has to be more forceful in normalising monetary policy. The recent easing in COVID-19 restrictions and reopening of the country’s borders, especially the land border crossing with Malaysia, will provide a boost to the travel and hospitality sectors. This should give Q2 GDP a boost. The advance estimate for Q1 though, is expected to show a modest slowdown due to high base effects. We forecast GDP to have grown 1.0% Q/Q and 4.0% Y/Y.”