14 Oct 2014
MAS maintains policy stance, upside risks in USD/SGD - ANZ
FXStreet (Bali) - The MAS (Monetary Authority of Singapore) maintained its policy stance given sticky core inflation, notes ANZ, adding that upside risk in USD/SGD remain.
Key Quotes
"MAS maintained their policy stance of modest and gradual appreciation in their semi-annual meeting this morning. Notably, their growth forecast was maintained at 2.5-3.5% while core inflation is expected to remain above long term averages at 2.0-3.0% in 2015."
"That said, their headline inflation forecast was downgraded to only 0.5-1.5% on account of imputed rentals, a risk we flagged earlier this year (Singapore rent supply shock). Supply side adjustments will continue to characterise Singapore’s growth path through 2015, keeping growth on a moderate path and core inflation sticky. Unchanged policy remains the appropriate stance though we note downside risks are growing."
"For USD/SGD, we continue to see an upside bias in the pair, driven by an outperforming US economy and potential US Fed tightening. We expect the SGD to underperform the USD but outperform most other currencies in the trade weighted basket (in line with the central bank’s S$NEER policy). We expect USD/SGD to end 2014 at 1.28."
Key Quotes
"MAS maintained their policy stance of modest and gradual appreciation in their semi-annual meeting this morning. Notably, their growth forecast was maintained at 2.5-3.5% while core inflation is expected to remain above long term averages at 2.0-3.0% in 2015."
"That said, their headline inflation forecast was downgraded to only 0.5-1.5% on account of imputed rentals, a risk we flagged earlier this year (Singapore rent supply shock). Supply side adjustments will continue to characterise Singapore’s growth path through 2015, keeping growth on a moderate path and core inflation sticky. Unchanged policy remains the appropriate stance though we note downside risks are growing."
"For USD/SGD, we continue to see an upside bias in the pair, driven by an outperforming US economy and potential US Fed tightening. We expect the SGD to underperform the USD but outperform most other currencies in the trade weighted basket (in line with the central bank’s S$NEER policy). We expect USD/SGD to end 2014 at 1.28."