Central bank to maintain status quo on monetary policy

Core CPI inflation rose to 3.3% YoY in December higher than expected 3%.

The Monetary Authority of Singapore (MAS) will maintain its cautious stance at the 29 January monetary policy meeting, an analysis by Standard Chartered said
According to Standard Chartered, there are several factors they considered for  this expectation. First is the fourth-quarter growth of 2023 exceeding expectations, reflecting a robust economic performance. Additionally, the latest inflation report indicates a shift to a slightly more positive global growth outlook, providing further support for a stable monetary policy stance.

However, challenges lie ahead in the first quarter of 2024, as the economy navigates through administrative price hikes. This factor, coupled with the higher-than-expected core Consumer Price Index (CPI) inflation of 3.3% year-on-year in December 2023, suggests a need for MAS to remain vigilant in addressing inflationary pressures while ensuring economic stability.

Labour-market conditions, although easing, are still characterised as tight. Standard Chartered emphasises the importance of maintaining a "sufficiently tight" stance to address any lingering concerns related to the labour market and to promote sustainable economic growth.

“The MAS’ inflation report had a slightly hawkish tilt on two fronts. First, shipping costs were added as an upside risk to inflation; and second, the MAS’ base- case global economic outlook appears to have shifted slightly more positive than previously. We expect the SGD NEER to trade near the upper bound of the policy band heading into the monetary policy meeting,” Standard Charted said.