Will MAS ease in October?
At a Glance
The desk anticipates that the Monetary Authority of Singapore (MAS) may consider further easing in October, driven by recent trends in inflation and export performance. Per the full note from MUFG EMEA, inflation has shown signs of easing, while export momentum is weakening, raising questions about the MAS's next steps. The desk highlights that the MAS's previous decisions to ease policy twice this year reflect a proactive approach to managing economic conditions. With no high-impact events on the calendar, market participants will closely monitor MAS's upcoming policy meeting for any signals regarding future easing.
Key Takeaways
- 01MAS likely to ease in October as inflation subsides.
- 02Weak export momentum supports the case for further policy adjustments.
- 03The Singapore dollar could face downward pressure if easing occurs.
Full Analysis
What the desk is arguing
The MAS is likely to reconsider its monetary stance at the upcoming October meeting, with easing becoming a plausible outcome. Given the easing inflationary pressures and waning export momentum, the MAS may opt for further measures to support economic growth and stability.
Despite previous stability in policy, the changing economic landscape indicates a shifting risk profile. An anticipated easing could align MAS policy with current market conditions, fostering greater liquidity and potentially placing downward pressure on the Singapore dollar.
Where it sits in our coverage
Currently, our consensus target for the Singapore dollar stands at 1.075, within a range of 1.04 to 1.12. This perspective aligns with the observation of current economic indicators suggesting potential easing by the MAS.
Specific firm targets substantiate our outlook. For instance, Barclays, JPMorgan, and MUFG have projected the following Dec-26 targets:
How other firms see it
While many firms anticipate an easing from MAS, some key players remain skeptical. For instance, BofA holds a contrary stance, suggesting that the central bank may not need further adjustments given their outlook on persistent inflationary risks. In contrast, firms like JPMorgan agree with the likelihood of easing, reinforcing our aligned view.
- Aligned stances:
- JPMorgan
- Contrary stances:
- BofA
Market Implications
Further easing from MAS could lead to a depreciation of the Singapore dollar, impacting currency pairs with potential volatility spikes. Traders should watch economic indicators closely ahead of the announcement to position themselves effectively.
From the original
After easing twice this year, the Monetary Authority of Singapore (MAS) kept its policy unchanged in July. Since then, inflation has eased and export momentum is showing signs of weakness. The big question on everyone’s mind is whether MAS will ease again in October? Lloyd Chan,