Commerzbank's FX Research report by Charlie Lay and Moses Lim highlights that the Monetary Authority of Singapore (MAS) has maintained its current policy stance, leaving the SGD NEER unchanged. MAS has revised its inflation forecast for 2026 to 1-2% from 0.5-1.5%, indicating a readiness to respond to inflationary pressures. The SGD NEER is currently estimated to be +0.9% above the mid-point for USD-SGD at 1.2640. The report emphasizes that MAS is strategically positioned to manage economic uncertainties.

MAS maintains policy amid inflation concerns

"MAS revised up the headline and core inflation forecast for this year to 1-2% from 0.5-1.5% in October last year. MAS is strategically positioned to respond to the upside risks to inflation or downside risks to growth."

"In the brief statement, MAS said that it 'is in an appropriate position to respond effectively to any risk to medium-term price stability and will continue to closely monitor economic developments amid uncertainties in the external environment.'"

"For the SGD NEER valuation, we estimate it is at the strong end of the band at +0.9% above the mid-point for USD-SGD at 1.2640, USD-MYR at 3.9330, and USD-CNY at 6.9490. The +/-2% range around the mid-point corresponds to USD-SGD at 1.2510-1.3020, with the mid-point at 1.2760, ceteris paribus."

"Overall, it was status quo from MAS. They are strategically and well-positioned to tackle the landscape ahead. There is no urgency to ease monetary conditions further, given the robust growth momentum."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)