Singapore seen keeping monetary policy unchanged as inflation risks linger
Nine out of 10 analysts expect MAS to hold policy
Inflation cooled to 2.7% in August from 5.5% peak
Singapore's GDP growth forecast adjusted to 2.0%-3.0% for 2024
By Xinghui Kok
SINGAPORE, Oct 9 (Reuters) -Singapore's central bank is widely expected to keep monetary policy unchanged next week and hold off easing settings amid inflation and growth uncertainties caused by geopolitical tensions.
Of the 10 analysts polled by Reuters, nine expect the Monetary Authority of Singapore (MAS) to hold off making changes to its policy at the scheduled review next Monday.
"Oil prices have climbed from recent geopolitical tensions in the Middle East, while extreme weather conditions are still holding sway over food prices, which remain above pre-pandemic levels," said Moody’s Analytics economist Denise Cheok.
"We see a reduction of slope of the S$NEER policy band in the first half of the year, while a more drastic move of bringing down the mid-point of the band might be on the cards in the second half of 2025, should imported inflation continue to step down discernibly."
Cheok thinks MAS is likely to ease only next year.
Inflation in the Asian financial hub remains sticky. While it cooled from a peak of 5.5% in early 2023, it remained at 2.7% year-on-year in August.
The central bank expects core inflation to ease more significantly in the final quarter to 2.5% to 3.5% for the year.
Singapore is often seen as a bellwether for global growth as its international trade dwarfs its domestic economy.
Growth slowed to 1.1% in 2023 from 3.8% in 2022. Its GDP rose 2.9% on a year-on-year basis in the second quarter of 2024, stronger than expected and leading economists to upgrade their forecasts.
The trade ministry in August adjusted its GDP growth forecast range for 2024 to 2.0% to 3.0%, from 1.0% to 3.0% previously.
Lee Yen Nee, a risk analyst at Fitch Solutions unit BMI, said: "The economy has been performing at close to its potential, which suggests that there is no hurry for the MAS to adjust its policy."
Central banks globally have started to cut rates. The Federal Reserve last month delivereda larger-than-usual half-percentage-point reduction, while the European Central Bank is tipped to cut rates next week for the third time this year.
Maybank economists said the falling SORA (Singapore Overnight Rate Average) interest rate alongside the U.S. rate cuts can be seen as a de-facto easing.
Instead of using interest rates, Singapore manages monetary policy by letting the local dollar rise or fall against currencies of its main trading partners within an undisclosed band, known as the Singapore dollar nominal effective exchange rate, or S$NEER.
It adjusts policy via three levers: the slope, mid-point and width of the policy band.
The outlier expecting a loosening of monetary policy next week was UOB bank, which cited major central banks in advanced economies' easing and the world was in a "last mile of disinflation".
UOB analysts expect a slight reduction to the S$NEER slope, but said "the prospect of a delay to policy normalisation to January or April 2025 remains."
The MAS has not changed policy since a tightening in October 2022, which was the fifth in a row, as broader concerns about growth kept authorities sidelined.
Core inflation peaked at 5.4% in the first quarter of 2023 and headline inflation at 7.3% in the third quarter of 2022.
MAS this year began making policy announcements every quarter instead of semiannually.
Reporting by Xinghui Kok; Editing by Sam Holmes
Asset collegati
Ultime news
Disclaimer: le entità di XM Group forniscono servizi di sola esecuzione e accesso al nostro servizio di trading online, che permette all'individuo di visualizzare e/o utilizzare i contenuti disponibili sul sito o attraverso di esso; non ha il proposito di modificare o espandere le proprie funzioni, né le modifica o espande. L'accesso e l'utilizzo sono sempre soggetti a: (i) Termini e condizioni; (ii) Avvertenza sui rischi e (iii) Disclaimer completo. Tali contenuti sono perciò forniti a scopo puramente informativo. Nello specifico, ti preghiamo di considerare che i contenuti del nostro servizio di trading online non rappresentano un sollecito né un'offerta ad operare sui mercati finanziari. Il trading su qualsiasi mercato finanziario comporta un notevole livello di rischio per il tuo capitale.
Tutto il materiale pubblicato sul nostro servizio di trading online è unicamente a scopo educativo e informativo, e non contiene (e non dovrebbe essere considerato come contenente) consigli e raccomandazioni di carattere finanziario, di trading o fiscale, né informazioni riguardanti i nostri prezzi di trading, offerte o solleciti riguardanti transazioni che possano coinvolgere strumenti finanziari, oppure promozioni finanziarie da te non richieste.
Tutti i contenuti di terze parti, oltre ai contenuti offerti da XM, siano essi opinioni, news, ricerca, analisi, prezzi, altre informazioni o link a siti di terzi presenti su questo sito, sono forniti "così com'è", e vanno considerati come commenti generali sui mercati; per questo motivo, non possono essere visti come consigli di investimento. Dato che tutti i contenuti sono intesi come ricerche di investimento, devi considerare e accettare che non sono stati preparati né creati seguendo i requisiti normativi pensati per promuovere l'indipendenza delle ricerche di investimento; per questo motivo, questi contenuti devono essere considerati come comunicazioni di marketing in base alle leggi e normative vigenti. Assicurati di avere letto e compreso pienamente la nostra Notifica sulla ricerca di investimento non indipendente e la nostra Informativa sul rischio riguardante le informazioni sopra citate; tali documenti sono consultabili qui.
