SGD: MAS maintained the rate of appreciation of the NEER policy band at 0% - RBC CM

Adam Cole, Research Analyst at RBC Capital Markets, notes that in its half-yearly MPS, MAS maintained the rate of appreciation of the NEER policy band at 0%.

Key Quotes

“The width of the policy band and the level at which it is centred were unchanged. MAS justified the unchanged decision by saying that economic growth was projected “to be only slightly higher in 2017,” and that “MAS core inflation will rise modestly from around 1% this year to average 1–2% in 2017.”

Although we were wrong in calling an easing today, we still assign a high probability of MAS easing (via a recentred band) since the external backdrop remains challenging. The next scheduled MPS is April 2017, though MAS set a precedent for an intermeeting policy change in January 2015. Domestic challenges were highlighted by an extremely weak preliminary Q3 GDP number overnight, which revealed a 4.1%q/q contraction (cons: 0.0%), the lowest quarterly growth rate since September 2012.”