102 views
Photo from MAS

Will MAS keep its policy parameters unchanged for the whole year?

Experts estimate the S$NEER to be at +1.5% appreciation gradient, with +/- 2.0% band.

Following the Monetary Authority of Singapore’s (MAS) decision to keep its policy parameters unchanged in January, an expert believes this approach is likely to continue throughout 2024.

Barnabas Gan, acting group chief economist of RHB, said inflation risks and a resilient economic backdrop will likely persuade MAS to keep its policy parameters unchanged in 2024.

“There is no impetus for the MAS to tweak its policy parameters for the year ahead,” Gan said.

“We think the current policy parameters are appropriate for dampening imported inflation and ensuring medium-term price stability. The S$NEER, according to our in-house estimation, has been well-behaved since the announcement of today’s MAS policy decision,” Gan added.

According to data from RHB, the Singapore dollar nominal effective exchange rate (S$NEER) is currently trading at +1.6% above the midpoint, similar to how it has been trending since the start of this year.

“[Such] suggests that the S$NEER is relatively rich and, thus, limited imported inflation effects via a stronger SGD and there is ample headroom, ~0.4% towards the 2.0% handle, for the S$NEER to appreciate to ensure price stability,” Gan said.

RHB also expects the US Fed Fund Rates (FFR) to peak at 5.25% – 5.50% and rate cuts by 2H24.

“Based on these factors, there is no impetus for the MAS to tighten or loosen policy at the upcoming monetary policy meeting,” Gan said.

Gan said MAS will only tighten should there be higher inflation pressures in 2024.”

In January, MAS kept its monetary policy statement (MPS) unchanged. RBH estimates the S$NEER to be at +1.5% appreciation gradient, with +/- 2.0% band.

Gan believes “policymakers were optimistic on both global and domestic GDP growth outlook,” thus the decision to retain current parameters.
 

Follow the link for more news on

Join Singapore Business Review community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

Exclusives

ION Orchard marks 15 years as a premier retail destination
The mall is proactive in conducting surveys to identify trends and optimise its tenant mix.
Retail
ION Orchard leads charge in sustainable takeaway practices
 Shoppers will enjoy discounts when they opt for a reusable mug or food container from Muuse.
Lendela on why banks need fintechs to buoy loan growth
Loan demand has doubled in Singapore, and fintechs can help onboard quality clients.