Monetary Authority of Singapore may tighten by “re-centering” its targeted band for SGD if economy continues rapid growth, HSBC economist Frederic Neumann says after government reports 2Q GDP +26% on quarter, seasonally adjusted, annualised.

“There’s no more slack left in the economy and the MAS may want to re-center again in October. With numbers like these, it’s certainly on the table,” Neumann says. MAS last re-centred SGD band in April, allowed “modest and gradual appreciation.”

However, HSBC expects Singapore growth to moderate in 2H without “hard landing” for economy. Note, MAS uses trade-weighted exchange rate, rather than interest rates, as main policy tool as trade flows dwarf island’s domestic economy.