Market participants expect MAS to recenter upwards sans slope increase

They also expect possible additional tightening of the policy band.

Most market participants see re-centering upwards of the policy band and possibly some additional tightening by the Monetary Authority of Singapore (MAS), banking and financial services firm, Standard Chartered, said.

But the banking firm said, in a statement, market expectations may differ from market pricing as the  Singapore dollar nominal effective exchange rate (SGD NEER) has been constrained by the strong end of the policy band.

If the strong end of the policy band moves higher, as most investors expect, it will likely cause SGD NEER to appreciate.

Meanwhile, Standard Chartered said analysts underscored further policy tightening but noted that there is a divergence in views on where policy levers the MAS is likely to pull.

Citing a news report on polled 15 analysts about the MAS monetary policy, Standard Chartered said two of the most popular responses amongst 15 analysts were dual tightening with changes to the slope and centre and re-centring upwards without a slope increase.

Overall, 12 out of 15 economists project the strong end of the policy band to move higher on 14 April, either through changes to centre or width or both, allowing more room for SGD NEER to appreciate.

Standard Chartered recently responded to investors’ queries on monetary policy as the MAS is expected to conduct a meeting on the matter on 14 April.