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25 Jul 2014
MAS: Expectations for a looser FX policy likely to increase - Nomura
FXStreet (Bali) - In view of Nomura, market expectations for a looser FX policy by the Singaporean Monetary Authority (MAS) in October are likely to increase, despite the base case for the bank remains for no FX policy changes just yet.
Key Quotes
"The lowering of the top end of the headline CPI forecast range (last revised on 14 April) by the Singaporean Monetary Authority (MAS), coupled with the recent series of weaker-than-expected activity and trade data releases, is likely to increase market expectations of FX policy loosening in October, in our view."
"Even as we acknowledge that the small probability of the MAS loosening policy in October has risen, our base case remains for no FX policy changes just yet – official statements remain firmly focused on core inflation and the risk of accumulated business costs being passed through to consumer prices due to the tight labour market."
"Indeed, the annual report acknowledged that the sustained FX policy stance “has restrained but not fully offset temporary inflationary pressures from economic restructuring.”
"Furthermore, while the MAS believes that growth could be dampened due to resource constraints this year, it still believes that cyclical factors are broadly supportive of its original 2-4% growth forecast range."
"July and August data, along with official rhetoric, will be important in making our FX policy call for October."
Key Quotes
"The lowering of the top end of the headline CPI forecast range (last revised on 14 April) by the Singaporean Monetary Authority (MAS), coupled with the recent series of weaker-than-expected activity and trade data releases, is likely to increase market expectations of FX policy loosening in October, in our view."
"Even as we acknowledge that the small probability of the MAS loosening policy in October has risen, our base case remains for no FX policy changes just yet – official statements remain firmly focused on core inflation and the risk of accumulated business costs being passed through to consumer prices due to the tight labour market."
"Indeed, the annual report acknowledged that the sustained FX policy stance “has restrained but not fully offset temporary inflationary pressures from economic restructuring.”
"Furthermore, while the MAS believes that growth could be dampened due to resource constraints this year, it still believes that cyclical factors are broadly supportive of its original 2-4% growth forecast range."
"July and August data, along with official rhetoric, will be important in making our FX policy call for October."