MAS Maintained Status Quo But Failed to Signal Hawkish Inclination

13 April 2017

Rates & FX View

MAS Maintained Status Quo But Failed to Signal Hawkish Inclination

Highlights

¨   MAS maintained the monetary policy framework: slope, width, and mid-point of SGD NEER policy band remain unchanged.

¨   MAS’s hint of dovishness surprised us, as the central bank retained its rhetoric to maintain a neutral policy stance over an extended period.

¨   Singapore’s 1Q GDP reinforced the stabilising economic growth outlook, expanding by 2.5% y-o-y (4Q16: 2.9%); MAS’s 2017 growth forecast unchanged at 1.0-3.0%.

¨   Core and headline CPI remain largely driven by energy related price pressures; MAS’s core and headline CPI forecast remained unchanged at 1.0-2.0% and 0.5-1.5% respectively.

¨   Discussions on MAS policy tightening likely to be premature ahead of October’s MAS MPS.

¨   SGD NEER likely to remain sticky at the mid-point over the coming months.

¨   Keep a neutral stance on SGD, with the USDSGD pair likely to trend modestly higher towards 1.43 by YE16.

¨   Neutral SGS view: SGS’s susceptibility to external gyrations limits our appetite for risk; opportunities to position for a 2/10y SGS steepener.

This message is intended only for the use of the person(s) to whom it is addressed and may contain information that is privileged or otherwise protected from disclosure. If you are not the intended recipient you are hereby notified that any use, review, disclosure or copying of this message and the information it contains is prohibited. If you receive the message in error, please notify the sender by reply e-mail and discard all its contents.   Thank You.