The Singapore economy is likely to see a robust expansion in 2022 which allows the MAS to focus on taming inflation. According to economists at TD Securities, January is the month to watch for any surprise move from the MAS. They expect the USD/SGD pair to edge lower to 1.32 by the second quarter.
MAS to wrestle with inflation in 2022
“We think external cost pressures are likely to remain in the quarters ahead while domestic policy developments and disinflationary effects from past policies could also contribute to higher inflation.”
“We see room for the MAS to take a more aggressive stance at its April 2022 policy review, with a combination of an upward re-centering of the midpoint and a 50bps increase in the slope of the policy band.”
“We can't completely rule out an off-cycle tightening before the April meeting, especially if global central banks start to tighten faster than expected.”
“Given our call for a more aggressive tightening, we expect the S$NEER to continue trending higher and for USD/SGD to trade lower to 1.32 by end of Q2 2022.”
