Why analysts don't expect MAS to change its monetary policy soon

There is broad stability in global economy.

As the Monetary Authority of Singapore (MAS) expects consumer price index (CPI) to rise towards 1% in 2017 compared to its official range of -1% to 0% this year, it is unlikely to re-centre its policy band lower this month, analysts say.

According to DBS Group Research, the decision of MAS to re-centre lower back in 2003 and 2009 was in response to impacts global economy has suffered.

"Apart from a significant change to its inflation outlook, the MAS will only consider a change in its monetary policy stance if there is a marked deterioration in the global economy," the research firm said.

To recall, the decision to re-centre lower in April 2009 was part of the G20-led global monetary easing to fight the Great Recession. Meanwhile, the re-centring in July 2003 was in response to the threat that the Severe Acute Respiratory Syndrome (SARS) posed to the economy.

"The MAS believes that the Zika outbreak this year will have a comparatively small impact on the economy," DBS noted.

The International Monetary Fund (IMF) has moderated its 2016 global growth outlook to 3.1% in October from 3.2% in April. For DBS, this minor change suggests broad stability in the global economy, with world trade showing signs of bottoming and recovery.

The MAS will issue its monetary policy stance on October 14.