Singapore: MAS to keep things steady for the time being

The Monetary Authority of Singapore (MAS) produced the tiniest of surprises with its monetary policy statement today.

Practically no-one was looking for any change to the SGD NEER path, and this was maintained at zero percent with no change to the bands.

The MAS has, however, shuffled around their reference to the phrase “a neutral policy stance is appropriate for an extended period…”, which they now refer to as their October 2016 guidance, without then saying that this is still in place. A sort of half-removal then, which leaves the door open to some change in April 2018, without making any firm commitments. Clever, given the prevailing uncertainties.

But the direction of travel is becoming clearer. With the policy citing some improvements domestically (very strong 3Q17 GDP figures today) but some caution about the global outlook, the growth forecast range has been narrowed from 1-3% for 2017, to the upper-half of 2-3%, with a higher, if fuzzier midpoint, and 2018 expected to improve further in line with potential growth, though it could be moderate than this year.

The inflation outlook is more nuanced, with the core inflation forecast range for 2017 tightened to the midpoint of 1.5% on the previous 1-2% range, and average 1-2% in 2018. But all items inflation is expected to come in at the low point of the previous 0.5-1.5% range for 2017 and is projected to stay in a 0-1% range in 2018, which is pretty low.