Singapore’s economy may be perking up, but the central bank isn’t likely to turn hawkish at this month’s policy review, analysts said.
Khoon Goh, head of Asia research at ANZ, said in a note on Wednesday that the question wasn’t really whether Singapore’s central bank, the Monetary Authority of Singapore (MAS), would stick with its neutral stance – which was the consensus view – but whether it would keep the “extended period” wording on the policy.
Goh expected the MAS announcement on April 13, although he noted the date wasn’t yet officially set.
If the “extended period” wording was dropped, Goh said that would be a hawkish signal, likely sending the Singapore dollar’s nominal effective exchange rate (NEER) higher.
But he added that it was premature to expect that hawkish tilt.
“There is no doubt that Singapore’s economic data has improved,” Goh said, citing indicators including the consumer price index’s (CPI) return to inflation after two years of deflation and improvements in the purchasing managers’ index (PMI).
The Nikkei Singapore PMI, released Wednesday, picked up to 52.2 in March, a four-month high, up from 51.4 in February, indicating stronger improvement in the private sector. Levels above 50 indicate expansion and levels below indicate contraction.