SINGAPORE (Apr 12): Maybank Kim Eng Research says it expects the Monetary Authority of Singapore (MAS) to normalise monetary policy on Friday amid rising global geopolitical tensions.

Singapore’s central bank is scheduled to issue its semi-annual policy statement at 8am on Apr 13.

“Our long-held house view is for the MAS to normalise monetary policy with a shift to a ‘modest and gradual appreciation’ path from its current neutral stance,” say Maybank analysts led by Saktiandi Supaat in a report on Thursday.

According to the research house, the negative output gap shows signs of turning positive, signalling sustained price pressures going into 2019.

In addition, it says its Taylor Rule-SGD NEER estimates show that the SGD NEER is expected to strengthen ahead.

Thus, Maybank’s analysts say the “appropriate policy response” would be for MAS to normalise monetary policy tomorrow.

“We remain positive on the SGD and maintain our forecast for USD-SGD to end 2018 at 1.24 for now,” Saktiandi says.

“Market does not appear to fully-price in a MAS move tomorrow and a MAS normalisation could see USD-SGD strengthen towards 1.3060, 1.3010 (2018 low) levels. We do not rule out a move below the 1.30-handle towards 1.2960 levels,” he adds.