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We anticipate the Monetary Authority of Singapore (MAS) will slightly increase the slope of the SGD NEER policy band in its April 14 statement. We view this move as a normalization that reverses last year’s slope reduction to combat a higher global inflation landscape driven by the Middle East conflict. The government’s sequencing is telling: the MAS will lead with a higher inflation outlook on April 14, followed by the Ministry of Trade and Industry’s (MTI) GDP revision in May. With Brent crude prices firmly elevated around USD110 per barrel, and exports maintaining resilience, the policy priority has pivoted toward addressing imported inflation before it de-anchors underlying price expectations. To reflect this, we expect the MAS to raise its core inflation forecast to 1.5-2.5% (from 1-2%) and the CPI-All Items projection higher to reflect the current energy shock.
USD/SGD has declined 0.5% to 1.2760 this morning. The USD retreated globally after US President Donald Trump backed a two-week ceasefire in exchange for Iran reopening the Strait of Hormuz, which Tehran said would be possible if the US and Israel halt attacks on Iran. Brent crude retreated from $110 per barrel to $103 after Trump’s tweet, pulling the US Treasury 10-year yield lower to 4.25% from its overnight high of 4.38%. The return of risk appetite was reflected in the AUD and NZD, while the EUR and GBP reprised their anti-USD roles. CHF reasserted its haven status while JPY and KRW enjoyed a respite from their abysmal levels.
The USD pullback reflects a short covering amid a Fed “wait-and-see” stance that keeps 2026 hike expectations off the table. The New York Fed reported that 1-year inflation expectations increased to 3.42% in March, below expectations of a rise to 3.50% from 3.00% in February. Five-year inflation expectations held steady at 3%. New York Fed President John Williams downplayed oil-driven headline inflation, citing limited underlying inflation pressure in a “low hire, no hire” labour market. His expectation that the war will add 0.1-0.2% to core inflation aligns with the March Summary of Economic Projections, which revised the 2026 core PCE inflation forecast to 2.7% from 2.5%. Do not expect Thursday’s February PCE inflation data to reflect the higher oil prices that arrived after Operation Epic Fury began on February 27.
Quote of the Day
“She got her looks from her father. He's a plastic surgeon.”
Groucho Marx
April 8 in history
The famous ancient Greek statue Venus de Milo was discovered on the Aegean island of Milos in 1820.
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