ING: Central Bank To Tighten Policy As GDP Growth Chugs Along

Ahead of today’s MAS decision ING note that “after two surprise tweaks to its monetary policy stance, MAS is widely expected to tighten policy. With inflation expected to heat up in the coming months, most analysts are pricing in aggressive action from MAS on Thursday. We believe, however, that MAS will opt to adjust the mid-point of its target band to cool price pressures while refraining from touching the slope or width of its policy band. Despite the imminent threat of inflation, we expect MAS to carry out a balanced approach to tightening as they recognise the impact of the Ukraine conflict on Singapore’s export base. As such, we believe that MAS will act decisively to tighten, however it may need to simultaneously ensure export competitiveness, especially against a backdrop of slowing global trade. Furthermore, holding off on ultra-aggressive action on Thursday gives MAS space to carry out more forceful tightening in October, should inflation accelerate further.”