Will MAS finally ease its monetary policy in 2024?

Experts say the central bank has seen the end of its tightening cycle.

With the Monetary Authority of Singapore's decision to keep the monetary policy parameters unchanged for the second time, questions on whether these will pave the way for an easing in 2024 rise.

According to UOB, there's a likelihood of easing in 2024, but not in January, when MAS will hold its first meeting for the year.

"We expect MAS to keep policy settings unchanged in January, in light of the upside risks to inflation on climate-related food supply shocks and stronger oil prices driven by supply constraints on heightened geopolitical tensions," UOB said.

" Furthermore, we think that it may be slightly premature for MAS to reduce the restrictiveness of monetary policy in the Jan 2024 Monetary Policy Statement (MPS), given the upcoming 1%-pt GST hike to 9% in Jan 2024, as risks of a stronger-than-expected passthrough of GST into consumer prices remain, should businesses seek to preserve profit margins amid an elevated cost environment," UOB added.

RHB shared a similar sentiment, saying that MAS has seen the "end of its tightening cycle after constricting policy parameters."

"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," THB 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," RHB added.

DBS, for its part, MAS will keep the SGD NEER policy band "appreciating into 2024."