Singapore Macro Flash: MAS Resumes Strong SGD Policy; Upgrading 2010 Forecasts - Wei Zheng Kit
MAS resumes "modest and gradual" appreciation AND re-centers band - This move was more aggressive than market expectations (either slope change or re-centering, but not both), and is a front loaded normalization of monetary conditions that immediately reverses the monetary easing that took place since October 2008. The new centre is estimated at 150bps above the mid-point of the old band. We reckon the slope to be 2% p.a., similar to the "modest and gradual appreciation" between April 2004 and October 2007.
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