MNI MAS Preview - October 2023: No Change, Focus On Next Policy Step

EXECUTIVE SUMMARY

• The broad sell-side consensus is for no change in the major MAS policy parameters, with the slope of the SGD NEER, band width and mid point all expected to remain unchanged at tomorrow’s policy announcement. This is also our firm bias.
• The focus for the MAS is likely to be on the balance between inflation pressures and a generally softer growth backdrop. Price pressures are cooling, but remain elevated by historical standards. It's likely to be too early for the central bank to be comfortable with the inflation backdrop to reduce the pace of SGD NEER appreciation.
• Current levels of the SGD NEER (based off Goldman Sach estimates) put the index around -0.45% below the top-end of the policy band. If the market was expecting further MAS tightening we would arguably be closer to the end of the policy band ahead of tomorrow's announcement.
• Full preview:

MAS Preview - October 2023.pdf