Story
UBS Projects MAS to Maintain Policy in July, Tighten in October
Summary
According to an analysis by UBS, the Monetary Authority of Singapore is expected to keep its policy settings unchanged in its upcoming July meeting but will likely tighten in October as inflation picks up. The bank has also maintained its medium-term forecasts for the USD/SGD exchange rate.
Analysts at UBS expect the Monetary Authority of Singapore (MAS) to maintain its current monetary policy settings in July. However, the bank anticipates a tightening move in October, citing the likelihood that inflation will increase over the coming months.
In line with this outlook, UBS is maintaining its forecasts for the U.S. dollar to Singapore dollar (USD/SGD) exchange rate. The bank projects the rate will be 1.26 by the end of September, 1.25 by the end of December, 1.25 by the end of March 2027, and 1.24 by the end of June 2027.
The forecast is also based on the bank's view that the U.S. dollar's recent strength will fade over the medium term. Furthermore, UBS believes the U.S. Federal Reserve is unlikely to raise interest rates, a stance that contrasts with current market pricing which anticipates 45 basis points of rate hikes by June 2027.
AdFor investors with Singapore dollar-based portfolios, UBS suggested a strategy of selling the downside risk in the Australian dollar to Singapore dollar (AUD/SGD) pair at levels below 0.885. The bank noted this strategy is aimed at yield pickup, reflecting the low domestic interest rates in the region.