Singapore maintains modest and gradual appreciation

The Monetary Authority of Singapore reduced the slope of its SGD NEER policy band slightly this morning - to 1% from an expectation of 1.5%. All other policy parameters of the SGD NEER were maintained. 

Coupled with the stronger-than-expected advance estimate of Q3 GDP growth, the MAS appears to be more relaxed over the growth path than the market believes. 

"The slope of the policy band was adjusted to 1%, down from our previous estimate of 1.5% (since 28 January). We believe the smaller-than-expected slope adjustment was a token signal, as there was no material change to the Authority's assessment of growth and CPI inflation. Indeed, although the statement's tone was more dovish, as we expected, the MAS retained its growth forecast for the year at around 2-2.5%, with risks tilted to the downside", says Barclays in a research note to its client. 

Overall, today's token easing was consistent with the view of no material deterioration in the outlook for growth and inflation amid the still-tight labour market. More importantly, it does not indicate of additional policy easing in April 2016 is likely, unless there is a significant worsening in the external outlook or signs of a clear and systemic external shock, states Barclays.