OCBC’s Sim Moh Siong and Christopher Wong expect the Monetary Authority of Singapore (MAS) to leave the Singapore Dollar (SGD) Nominal Effective Exchange Rate (S$NEER) policy unchanged at Monday’s meeting despite a modest rebound in core Consumer Price Index (CPI) to 1.6% year-on-year in June. They argue the move does not yet signal a broad or persistent inflation impulse, and say a balanced hold should limit SGD reaction, though emphasis on imported inflation could keep S$NEER firm.

Policy pause but watch statement tone

"Our base case for upcoming MAS MPS looks for a hold at Monday’s meeting."

"The modest rebound warrants some caution, but it does not yet suggest the broad or persistent inflation impulse needed to justify another tightening so soon after Apr."

"A hold should therefore be seen as MAS taking more time to assess lagged imported-cost and energy pass-through, rather than signalling an all-clear on inflation."

"A balanced hold should see limited SGD reaction, while greater emphasis on lagged imported inflation or renewed domestic price pressures could keep S$NEER firm."

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