Morgan Stanley’s latest report reveals that the Monetary Authority of Singapore (MAS) has opted to keep its policy settings unchanged following its July meeting. This decision comes after previous easing measures in January and April. The report highlights that the MAS’s decision was influenced by a surprising uptick in near-term growth momentum and the absence of further disinflation. However, the economic outlook remains uncertain, leaving the door open for potential future policy adjustments.
The report, authored by Derrick Y Kam, an Asia Economist at Morgan Stanley, outlines several scenarios that could prompt MAS to alter its policy stance. These include a move to a zero per cent stance if growth unexpectedly declines, potentially triggering disinflationary pressures. Alternatively, a re-centre lower could be considered in the event of a global recession impacting growth. Conversely, an increase in the slope of appreciation, indicating tightening, is deemed unlikely for the October meeting but could be a possibility in 2026 if growth accelerates beyond expectations.
The MAS has stated it is in an “appropriate position to respond to risks to medium-term price stability,” suggesting readiness to adjust policies as needed. Morgan Stanley’s base case anticipates the MAS will maintain its current stance in October, with a bias towards easing if growth or inflation surprises negatively. This cautious approach underscores the ongoing economic uncertainties and the need for flexibility in monetary policy.
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