Barnabas Gan, Economist at UOB Group, assesses the recent unscheduled monetary policy meeting by the MAS.

Key Takeaways

“In an off-cycle monetary policy meeting (25 Jan), the Monetary Authority of Singapore (MAS) raised the S$NEER policy slope ‘slightly’, while keeping the width of the policy band and the level at which it is centred unchanged. We estimate that the current appreciation gradient of the band is now at 1.0%, up from 0.5% before today’s announcement.”

“We think that the off-schedule meeting … is in response to the elevated inflation risks in Singapore. According to the policy statement, policymakers cited that the outlook for Singapore’s inflation has shifted higher since Oct 2021, led by ‘recovering global demand and persistent supply-side frictions.”

“For the scheduled Apr 2022 monetary policy meeting, it is a ‘live’ decision and we expect the MAS to further steepen the S$NEER gradient ‘slightly’. This is estimated to bring the policy band gradient to an appreciation of 1.5% then. That said, there will also be a material risk for added tightening by policymakers via a recentring of the policy mid-point, given that the S$NEER has already appreciated within the upper half of the policy band since Oct 2021’s policy meeting.”