DBS Look For The MAS To Steepen The Slope

DBS see the Monetary Authority of Singapore “steepening the slope of the SGD NEER policy band a third time to 3%. According to our model, the slope first steepened from 0% to 1% last October; and 2% at an unscheduled meeting on 25 January. The current landscape is similar to October 2007 and October 2010, when the slope returned to 3%. First, Brent crude oil prices have been above US$100 per barrel since March. Second, the MAS core inflation has risen above 2% Y/Y since December and is advancing towards 3% by mid-year on the Ukraine war prolonging supply-chain disruptions. The MAS could pair the steepening with a re-centring, a decision mor likely for the October review. Lastly, a wider the policy band is unlikely.”