MNI MAS Preview - October 2022: Further Tightening Via Re-Centering, Double Tightening Can’t Be Ruled Out

EXECUTIVE SUMMARY

• This Friday is expected to deliver another tightening from the MAS. Much like BoK this week, the main question is how much the MAS will deliver. The hawkish views from the side-sell rest with both a re-centering of the NEER higher, coupled with a further lift in the rate annual NEER appreciation. Our view rests with a re-centering higher of the NEER (most likely to the prevailing level).
• With inflation continuing to surprise on the upside, the risks of another double tightening can’t be underestimated though. The risks are that the core inflation backdrop for the MAS may be stronger than the recently revised projection higher for 2022. A continued recovery in the domestic economy, coupled with a tight labour market, skews the core inflation outlook higher in the near term.
• The case for a less aggressive policy reaction, i.e. just a re-centering in the NEER higher, and leaving the rate of NEER appreciation unchanged, largely rests on uncertainties surrounding the growth outlook.

Click here to see the full preview: MAS Preview - October 2022.pdf