Experts split on October policy move following core inflation increase

MAS core inflation expanded to 2.7% YoY in August.

Experts are divided on the likelihood of a monetary policy change in October after core inflation rose in August.

A UOB economist suggested there might be a “slight” reduction of 50 basis points to the S$NEER slope, while RHB believes the central bank will maintain its current policy parameters unchanged.

“We do not anticipate any adjustments to the band's midpoint unless there is a significant shock, such as a recession or another major global event. We believe the current benchmark rate is appropriate for ensuring price stability and supporting long-term sustainable growth,” RHB stated.

On the other hand, UOB's prediction of a slight reduction is “premised on a forward-looking approach.”

“Our baseline core inflation forecast indicates a return to year-on-year core inflation levels slightly below 2% by as early as 4Q24, on an ex-GST basis, and continuing into 1Q25,” UOB explained.

UOB also noted that “the evolving economic outlook does not justify a more aggressive easing move by MAS, such as a complete flattening of the S$NEER slope.”