Economists split on MAS policy for early 2025 as October inflation eases

Headline and core inflation down 1.4%YoY and 2.1%, respectively.

Experts are split on whether a monetary policy adjustment will occur in early 2025 following inflation eases in October.

A UOB expert said the Monetary Authority of Singapore (MAS) may slightly reduce the slope of the S$NEER policy band by 50 basis points in January or April 2025, citing easing inflationary pressures and a gradual return to price stability.

"We view our call as a step to restore monetary policy neutrality, to be consistent with trend growth and y/y core inflation returning to desired levels where the cyclically-neutral path of the S$NEER is associated with a positive rate of appreciation" UOB explained.

They added that core inflation is expected to ease to 1.7% in 2025, supported by higher base effects and moderating cost pressures.

Headline inflation eased to 1.4% YoY in October from 2% in September, whilst core inflation fell to 2.1% from 2.8% over the same period.

RHB, however, expects MAS to maintain its current policy parameters into the first half of 2025, emphasising the entrenched disinflation trend and manageable inflation risks.

For 2024, UOB maintained its average core inflation forecast at 2.8% and expects headline inflation to average 2.3%.

RHB also projected core inflation at 2.8% and headline inflation at 2.6%, citing muted inflationary trends across the region.