MAS to keep its policy unchanged in January 2024: experts

The prediction comes on the back of core inflation’s continued moderating trajectory.

Experts believe that the Monetary Authority of Singapore (MAS) will keep its policy parameters unchanged in its January 2024 monetary policy statement (MPS).

The prediction comes on the back of core inflation’s continued moderating trajectory towards the long-term historical average of about 1.8%, said UOB Senior Economist Alvin Liew.

“We project core inflation to average 2.2% excluding GST in 2024,” Liew added.

Liew said it is also “too soon” to expect MAS to “reverse some of the tightening in January 2024 given the upside risk to oil prices should the Israel-Hamas conflict widen and/or uncertainty in the extent of passthrough in the upcoming 1%-pt GST hike to 9% next year.”

“Thus, our base case calls for no change in January 2024, followed by a slight 50bps reduction in the slope of the S$NEER policy band to an estimated 1.0% in the April 2024 MPS, which could provide some countercyclical effects to support the recovery of the economy back to potential,” Liew.

Acting Group Chief Economist of RHB, Barnabas Gan, also believes that MAS have seen the end of its tightening cycle after constricting policy parameters for five straight meetings since October 2021.

“The decision to keep policy parameters unchanged tells us that policymakers see no impetus to tweak monetary policy given growth and inflation in the medium term,” Gan said.

“Barring a sudden and unforeseen deterioration of global economic fundamentals and/or heightened inflation prognosis, we forecast the MAS will keep policy parameters in its meeting in January 2024,” Gan added.