MUFG’s Lloyd Chan expects MAS to keep policy unchanged at the July meeting while maintaining a tightening bias, distinguishing between energy-driven and domestically generated inflation. Strong Singapore growth and a positive output gap justify tight settings. MUFG sees MAS policy as broadly supportive for the Singapore Dollar and expects any tightening surprise to push USD/SGD lower.

MAS stance seen SGD supportive overall

"We expect MAS to leave policy settings unchanged at its July policy meeting while retaining a clear tightening bias."

"Growth conditions alone would justify maintaining a tight policy stance."

"Nevertheless, we believe MAS is likely to distinguish between an energy-driven inflation shock and persistent domestically generated inflation."

"That said, the policy debate is becoming increasingly balanced."

"Implications for USD/SGD: Regardless of whether MAS delivers a hawkish hold or a modest tightening, the policy signal remains broadly SGD-supportive."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)