Odds stacking up for another monetary policy easing in October: analysts

The MAS will be more dovish.

A slew of poor economic data will likely push SIngapore’s central bank to ease monetary policy in October, following an unscheduled easing move in January.

The odds have risen for another easing as dire August export numbers have dragged Singapore ever closer to a state of technical recession.

“We are increasingly convinced that the upcoming Monetary Authority of Singapore meeting in October could present some dovish bias and there could be a one-off downward shift in the SGD NEER midpoint by 1%,” said Francis Tan, Economist at UOB.

Tan does not expect the SGD nominal effective exchange rate (NEER) slope and bandwidth to be adjusted.

Bank of America Merrill Lynch economist Hak Bin Chua said that short-term interest rates will likely rise further if the MAS shifts to a neutral bias in October.

“We think MAS will likely shift its current weak appreciation bias to a neutral (zero) bias and/or re-center the S$NEER band downwards in October, if a technical recession is confirmed for 3Q,” he said.