MAS Unchanged, Core Inflation Expected To Decline Further, GDP To Gradually Improve

As widely expected, the MAS left its major policy settings unchanged at the October meeting. The slope, width and mid-point of the policy band were all held steady. The central bank noted "... the current appreciating path of the S$NEER policy band is assessed to be sufficiently tight. A sustained appreciation of the policy band is necessary to dampen imported inflation and curb domestic cost pressures, thus ensuring medium-term price stability."

• The central bank expects GDP growth to gradually in 2024, although it notes much uncertainty around the global outlook. Growth is expected to be close to potential, with a slightly negative output gap. This is after 2023 growth is expected to be near the lower end of the 0.5-1.5% forecast range.
• Also note Q3 GDP was released at the same time, coming in better than expected (1.0% q/q, versus 0.6% forecast, 0.7% y/y, 0.4% forecast).
• On inflation, the central bank said "MAS Core Inflation is projected to slow to an average of 2.5–3.5% for the year as a whole. Excluding the impact of the increase in the GST rate in January, core inflation is forecast at 1.5–2.5%. CPI-All Items inflation is projected to average between 3.0–4.0% in 2024."