Monetary Authority of Singapore leaves policy stance unchanged, likely to remain neutral in the long-term

The Monetary Authority of Singapore (MAS) left policy stance unchanged at the monetary policy meeting held today, largely in line with expectations. Moreover, it is likely to remain neutral in the long-term. The Monetary Policy Statement was dovish.

The surprise contraction in Q3 GDP reinforces our view that tough times are here to stay, and we are revising down our 2016 and 2017 GDP growth forecasts to 1.2 percent and 1.4 percent respectively (from 1.9 percent and 2.0 percent previously).

MAS has introduced a form of forward guidance, stating that a neutral policy stance will be needed for an extended period of time.

"We still see the risk of the next move by MAS to be an easing, and expect the S$NEER to gradually head below the midpoint," ANZ commented in its latest research note.