Singapore’s inflation figures for June have come in softer than anticipated, with core Consumer Price Index (CPI) holding steady at 0.6% and headline inflation easing to 0.8%. This development, according to eToro Market Analyst Josh Gilbert, could prompt the Monetary Authority of Singapore (MAS) to consider loosening monetary policy by the end of the month.
The latest data indicates a consistent disinflation trend, with food prices remaining low and recreation costs continuing to decline. Core inflation pressures are well within the official forecast range, suggesting that previous policy tightening measures have been effective without exacerbating price pressures. “The consistent disinflation trend is a strong sign that cost-of-living pressures are easing,” Gilbert noted.
With economic growth still sluggish and inflation under control, the MAS faces increased pressure to adjust its policy stance. Gilbert highlighted that the current economic environment makes it challenging for MAS to maintain its existing policy, stating, “The door is now wide open for MAS to shift gears and step in to support growth.”
However, Gilbert cautioned against reckless easing, pointing out global risks such as potential spikes in oil prices and tariffs. He emphasised that maintaining overly tight policies could be detrimental to the economy. As the MAS deliberates its next move, the June CPI data provides a compelling case for a policy shift to bolster growth whilst remaining vigilant of external risks.
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