MAS Preview: 70% probability of no change in monetary policy - Westpac

Sean Callow, Research Analyst at Westpac, suggests that the Monetary Authority of Singapore’s semi-annual policy review is due at 8am local/11am Syd on Friday while the advance reading of Q3 GDP will be released at the same time.

Key Quotes

“After April’s surprise easing, we place a 70% probability on no change in monetary policy, with any surprise likely to be a re-centring of the policy band. Growth is expected to remain sluggish.

In its 14 April statement, USD/SGD rose about 1.5 cents as the MAS surprised markets by dropping its long-standing policy of SGD NEER following a “modest and gradual appreciation path”, switching to “zero percent appreciation”. They were sufficiently concerned to limit expectations of SGD weakness that they stressed that “(t)his is not a policy to depreciate the domestic currency”, even though that should have been self-evident.

On our estimates, SGD NEER has been reasonably stable since April, drifting to the strong side in June-August but recently dipping to about -0.4%, at no stage challenging the boundaries of the (estimated) +/-2% band.”