What to expect from MAS’ April policy statement
UOB expects MAS to release its statement around 10-14 April.
Experts in UOB have lowered their “confidence level” for further tightening of the monetary policy in April due to the US and European banking sector turmoil in recent weeks.
“If systemic impact and contagion risks on the US and global financial sector continue to be reduced by actions from the major central banks, then it will be reasonable to expect the MAS to tighten further, via a re-centring higher of the Singapore dollar Nominal Effective Exchange Rate (S$NEER) policy mid-point as the S$NEER is currently at +1% above the midpoint, within the upper part of the estimated +/- 2% trading bands,” Alvin Liew, UOB senior economist, said.
Liew said that whilst MAS’ monetary policy has “moved further into a restrictive stance,” it may still be “too early to call a pause” due to several factors.
These factors include the stickiness of core inflation, wage pressures due to a tight labour market and the subsequent pass-through to domestic inflation as reflected by the uptrend in services inflation.