Singapore: MAS shifts to neutral and sees recession – UOB

Economist at UOB Group Barnabas Gan reviewed the recent decision by the Monetary Authority of Singapore (MAS) to ease its monetary conditions and its forecasts for recession.

Key Quotes

“In line with our call, the Monetary Authority of Singapore (MAS) eased its monetary policy by adopting a “zero percent per annum rate of appreciation of the policy band”, while keeping the width of the band unchanged.”

“MAS kept its growth outlook for 2020 unchanged, with GDP growth projected at a range between -4.0% and -1.0%. In the MAS Monetary Policy Statement, it added that the COVID-19 pandemic has “led to a severe contraction in economic activity both in Singapore and globally”, given the ongoing supply chain disruptions, travel restrictions and negative demand shocks. MAS also lowered its headline and core inflation forecast ranges to -1.0% to 0.0%, down from its initial range projection of 0.5% – 1.5%.”

“The S$NEER remained stable despite MAS announcement to loosen monetary policy, suggesting that the move has been mostly priced in.”