Friday, April 14, 2017

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


¨   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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