August inflation edged up to 0.7% y/y and core inflation, which excludes the price of cars and accommodation, remained unchanged for the second consecutive month at 1.9% y/y, which seems to place the MAS to be less hawkish. Based on the inflation figures, we feel there is less pressure for the MAS to tighten its monetary policy during the October’s policy meeting. Besides, external uncertainties and potential downside risk to growth provide space for the MAS to maintain the current exchange rate policy.

• August inflation edged up to 0.7% y/y from the 0.6% y/y in July, as accommodation and private transport fell .6% y/y and 0.2% y/y, respectively which have negated the higher prices of retail and food that rose 2.0% y/y and 1.7% y/y, respectively.

• Meanwhile, core inflation, which excludes the price of cars and accommodation, remained unchanged for the second consecutive month at 1.9%y/y.

• With the average headline and core inflation at 0.4% y/y and 1.6% y/y year to date, we feel there is less pressure for the MAS to tighten its monetary policy during the October’s policy meeting. Besides, external uncertainties and potential downside risk to growth provide more space for the MAS to maintain the current exchange rate policy

Source: AmInvest Research - 25 Sept 2018