Sell-Side Views Post MAS On-Hold Decision From Friday

Sell-side analysts don't expect further tightening in the wake of MAS's on hold decision from Friday.

DBS: "The Monetary Authority of Singapore’s decision not to change the policy band’s slope, mid-point, and width did not surprise us. Since the last tightening in October 2022, the SGD NEER has, as per our model, shifted from the top to the mid-point, a sign that worries over elevated inflation were giving way to a challenging global growth landscape. The policy statement confirmed our belief that the sharp tightening between the two Octobers in 2021 and 2022 (steepening the slope from 0% to 3% and recentering the band up by 4%) were ample to dampen inflation pressures this year.

We don’t see the MAS tweaking its SGD policy in October. The central bank expects core inflation to drop more discernibly in 2H23 to 2.5% YoY by the end of 2023 from the record 5.5% in January-February. Externally, the MAS expects a sharper-than-expected downturn in the advanced economies to ease global inflationary pressures."

TD: "The Monetary Authority of Singapore (MAS) left its monetary policy settings unchanged, in a surprise outcome. It was a close call among analysts (we expected the slope to be raised by 50bps) but the MAS appears to be concerned over the economic outlook. The on-hold decision today likely spells the end of MAS' tightening cycle, and we expect settings to be left on hold again at its next meeting in October especially as most developed economy central banks (including the Fed and ECB) would have likely ended their hiking cycles.

We don't expect the SGD to weaken markedly as the slope of the S$NEER band is still at +1.5% per annum based on our estimate despite the on-hold decision today. We still retain our bearish USDSGD profile, expecting it to trade to 1.30 by year-end."

UOB: "Overall, the MAS took the prudent approach and kept policy unchanged in Apr. We now expect the current tightening cycle to have ended and the MAS to maintain this pause in the next Oct meeting. If there is another off-cycle announcement before Oct, we think it will likely be due to a sudden worsening in external conditions leading to a sharp downgrade in growth outlook, so the MAS will likely shift to a more accommodative policy rather than further tightening in its next move, but that is not our base case to expect an off-cycle policy announcement for now."