J.P. Morgan Update Post Yesterday's Downside CPI Miss

The US bank stills sees caution around the monetary policy outlook despite yesterday's downside CPI surprise, see below more details:

J.P. Morgan: "Singapore’s March core CPI (which excludes private road transport and accommodation) was down 0.1%m/m, sa, and was up a lower-than-expected 3.1%oya (J.P. Morgan and consensus: 3.5%oya). Services and food services inflation remain sticky– In the details, both goods and services inflation eased in sequential terms, with the latter driven by a slowing in travel-related services. However, both food services and services excluding travel rose in sequential terms and suggests some stickiness in services inflation and could reflect the residual impact of the ongoing pass-through of latent price pressures.

Thus, while the ex-ante view of disinflation remains, the pace remains unclear given the residual uncertainties as noted. Relatedly, this focuses attention on the sequential path of inflation rather than the over-year-ago comparisons.

Caution the better part of valor for monetary policy – The implication of uncertainties in pricing behavior suggests that monetary policy settings should be kept unchanged until there is clear evidence that inflation has indeed turned the corner, which is already evident in both input costs, via the DSPI (Domestic Supply Price Index), the ULC (unit labor costs), but in the pass-through of latent pressures from supply-side costs into final prices and this is where the focus is over the next few months."