Singapore’s lower-than-expected MAS core inflation cements case for pause at upcoming MAS April review, says ANZ Research

Singapore’s lower than expected MAS core inflation print, which eased to 1.5 percent y/y in February from 1.7 percent the month before, cemented the case for a pause at the upcoming April review of the Monetary Authority of Singapore (MAS), according to the latest report from ANZ Research.

Alongside economic growth slowing towards trend and the US Federal Reserve signalling a pause in their hiking cycle, there is no pressing need for the MAS to further tighten policy at this stage.

While a tight labour market could still see inflation pressures emerge, this is not evident, especially in the costs of services. Lower prices for electricity and gas in the coming quarter look set to keep core inflation manageable.

A tight labour market is still expected to exert some upward pressure on domestic prices. But at present, this is not evident in the CPI numbers with the competitive landscape helping to hold down prices for services. The MAS has maintained its forecast for Core Inflation and CPI-All Items inflation at 0.5-1.5 percent and 1.5-2.5 percent respectively for 2019, the report added.

"While a tight labour market could still see inflation pressures emerge, this is not evident, especially in the costs of services. Lower prices for electricity and gas in the coming quarter look set to keep core inflation manageable," ANZ Research commented.