Sell-Side Views On MAS Post Yesterday's CPI Data

Goldman Sachs and J.P. Morgan see no MAS changes this year, with inflation momentum expected to cool further, see below for more details. To recap, June y/y inflation was +4.5% y/y (4.4% forecast, 5.1% prior). Core inflation was 4.2% (4.2% forecast 4.7% prior).

• Goldman Sachs: "Going forward, we continue to expect core inflation to gradually ease throughout this year. Risk to inflation remains to the upside give then still tight labor market and another potential shock to global oil and food prices. Our baseline is that MAS will keep its monetary policy parameters unchanged this year as growth slows and inflation pressures ease. "
• J.P. Morgan: Looking for sequential core CPI to continue easing; food prices in focus – Food services inflation continued on its downtrend in June and we expect this trend to continue, resonating also with the decline in core services prices. Notwithstanding the El Nino effect later this year, the trend should remain in place. Subsequently, we expect that the sequential path of core CPI will continue slowing in 2H23. We thus expect that the MAS will remain on hold through this year, keeping its FX NEER BBC (Basket, Band, Crawl) unchanged.