SINGAPORE: Updated MAS Viewpoints Ahead Of Next Week's Policy Meeting
See below some updated sell-side view points ahead of next week's MAS policy meeting. It is expected to be a close call, with viewpoints balanced between an on hold outcome, versus further MAS easing.
J.P. Morgan: "Base effects notwithstanding, core momentum has normalized over 2Q, and we see MAS on hold in a close call next Thursday: Looking ahead, we think base effects should sustain year-ago core inflation around the current sub-1% rate (2025F average: 0.7%) but within the MAS forecast range of 0.5%-1.5%. That said, core momentum has normalized to pre-pandemic norms after cooling materially over 4Q24 and 1Q25, and further downward pressure on inflation via slower GDP growth is not expected until later in the year. We therefore expect the MAS to hold its policy settings next week, but it continues to be a close call. The central bank could still deliver a 50bp S$NEER slope reduction on Thursday (30 July) instead of October as in our forecast."
Goldman Sachs: "We expect the MAS to flatten the slope of the SGD NEER in the July meeting. Our estimation of the SGD NEER appreciation slope is currently at 0.5% per annum. As the balance of risks to growth remains tilted to the downside—due to drags from US tariffs, prolonged uncertainties, and slower global growth—we now expect the MAS to reduce the slope of the SGD NEER "slightly," by around 50 basis points to a flat slope, at the July meeting (a change from our previous expectation of no change). We see risks of the MAS taking a "wait-and-see" stance at the July meeting, given that the global growth outlook for 2025 is likely to be slightly better on the margin relative to the April meeting."
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