SINGAPORE: Singapore's central bank is expected to keep policy steady at next week's review, but a number of economists say a further easing this year remains a distinct possibility in the face of slow growth, low inflation and depressed global demand.
Twelve of 18 analysts in a Reuters survey predicted the Monetary Authority of Singapore will keep its exchange-rate based policy on hold at the April review, partly due to the view that fiscal spending will help cushion a cooling economy.
The central bank has also maintained its core inflation projection at 0.5 percent to 1.5 percent for 2016, suggesting MAS will not rush into easing policy.
Still, given the overseas headwinds and a stressed manufacturing sector, the remaining six analysts in the survey expect policy to be eased next week - most say the central bank was likely to reduce the appreciation rate of the slope, probably to zero percent.
If the MAS were to hold off from easing for now, weak exports could increase the probability of an easing in policy in October, said Roy Teo, senior FX strategist for ABN AMRO Bank in Singapore.
The MAS can adjust policy by changing the slope, width or midpoint of the Singapore dollar NEER policy band. Most analysts estimate that the slope has an appreciation rate of 0.5 percent per year.
Like much of Asia, Singapore's manufacturing sector has been hit hard by a collapse in demand from major trading partners, particularly China. The city-state's non-oil domestic exports fell 0.1 percent in 2015, the third straight annual drop.
That, and the recent cutting of the official 2016 headline inflation forecast to -1.0 percent to 0.0 percent, underscored the slack in the economy which MAS may have to address with more stimulus.
The central bank eased monetary twice last year, most recently at its semiannual policy review in October.
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