MAS maintains a hold on SGD NEER policy: Fitch | Singapore Business Review
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MAS maintains a hold on SGD NEER policy: Fitch

Inflation to pick up but remains benign this year.

The Monetary Authority of Singapore (MAS) has maintained a hold on its SGD NEER policy to help facilitate economic recovery, according to a prediction by Fitch Solutions.

According to Fitch, they share the assessment of MAS that inflation is likely to pickup but remains benign this year.

“MAS has maintained a hold on all levers of its monetary policy surrounding the SGD NEER policy band, since its last decision on 14 October 2020. We have also seen no indication of any change to its slightly dovish tone then, when MAS noted in an accompanying statement that ‘the underlying growth momentum will be weak, and the negative output gap will only narrow slowly in the year ahead’ and that it would ‘therefore maintain a zero percent per annum rate of appreciation of the policy band’. It also added that ‘an accommodative policy stance will remain appropriate for some time',” Fitch noted in a commentary.

Meanwhile, Fitch revised its average consumer price inflation forecast to 0.5% YoY from the previous 1.4% YoY. Fitch said this level of inflation would allow MAS to continue with its accommodative policy in 2021.

“The revision reflects our view that while inflation is still likely to trend higher and return to positive territory, the extent is likely to be lesser than we previously expected due to even looser labour market conditions,” said Fitch.

However, despite MAS ‘holding’ for 2021, recovery will still remain fragile as global economies continue to keep the pandemic at bay in absence of a vaccine.
 

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