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UBS Expects Singapore's Central Bank to Maintain Policy in July, Tighten in October
Summary
Analysts at UBS anticipate the Monetary Authority of Singapore will keep its policy settings unchanged in its upcoming July review but will likely tighten them in October due to expected increases in inflation. The bank maintains its forecast for a gradual strengthening of the Singapore dollar against the U.S. dollar.
UBS analysts project that the Monetary Authority of Singapore (MAS) will maintain its current monetary policy settings in July. The bank anticipates a policy tightening in the subsequent October review, citing expectations that inflation is likely to increase over the coming months.
Reflecting this outlook, UBS has maintained its forecasts for the USD/SGD currency pair. The bank projects the rate will be 1.26 by the end of September, 1.25 by the end of December, holding at 1.25 through March 2027, and strengthening to 1.24 by the end of June 2027.
The forecast is also based on a broader view that the U.S. dollar's current strength will fade over the medium term. UBS stated its belief that the U.S. Federal Reserve is unlikely to hike interest rates, a stance that differs from current market pricing which suggests 45 basis points of Fed rate hikes by June 2027.
AdFor investors with Singapore dollar-based portfolios, UBS also suggested a strategy related to the Australian dollar. The bank favors selling the downside risk in the AUD/SGD pair at levels below 0.885 to achieve a yield pickup, noting the region's low domestic interest rates.