13 April 2017
Rates & FX View
MAS Maintained Status Quo But Failed to Signal Hawkish Inclination
¨ 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.
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