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Disinflation trends may prompt MAS slope cut 

UOB experts said MAS may cut monetary policy slope by 50 bps.

Experts believe that a normalisation of the monetary policy via a slight slope reduction could occur in July.

UOB Senior Economist Alvin Liew said the  Monetary Authority of Singapore (MAS)  may reduce the slope of the monetary policy by 50 bps on the back of “a continued transmission of imported disinflation into Singapore’s core inflation, anchored by the restraining effect from a gradual appreciation of the S$NEER on the prevailing slope settings, in addition to a softening domestic cost pressures.”

Liew underscored that the April monetary policy statement (MPS) of the central bank “imply greater confidence in the disinflation process.” 

Liew said the MPS also acknowledged that the uptick in core inflation in Jan-Feb of 3.4% YoY from 4Q23  was “lower than expected” and that inflation for food and travel-related services slowed and was “more modest than anticipated”. 

“MAS assessed that underlying inflation should moderate further as ‘imported and domestic cost pressures continue to abate’ whilst the increase in unit labour costs (ULC) will be at a ‘significantly slower pace compared to the preceding two years’,” Liew said,

Meanwhile, Maybank experts Chua Hak Bin and Brian Lee Shun Rong believe MAS will ease policy only in October “at the earliest,” via a gentler S$NEER slope.  

READ MORE: MAS policy holds steady for medium-term price stability

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