MNI MAS Preview - April 2023: A Close Call, But No Change Expected

EXECUTIVE SUMMARY

• Friday’s MAS policy meeting is a close call in terms of whether the central bank delivers further tightening, or decides to hold steady. Like other central banks in the region, the MAS faces a delicate balancing act in terms of assessing the outlook from an inflation and growth standpoint. Our bias rests with the MAS holding steady at this meeting, but admittedly it is a close call. There is no clear sell-side consensus in terms of what will be delivered.
• On balance, the MAS may be comfortable with how the inflation outlook has evolved since the last policy meeting in October 2022. The central bank stated at that time, core inflation was expected to remain elevated through the first half of this year, before coming down gradually. There may not be enough fresh concern on the outlook to warrant a further tightening this April.
• Equally though, the MAS may want to take out some further insurance that inflation will gradually move lower, by tightening further. We would be more confident in such an outlook if the global backdrop was on firmer ground. Arguably, since the last policy meeting, the global outlook has turned less supportive.
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