The Bank of Russia unexpectedly maintained its key interest rate at a record-high 21% , defying analysts’ expectations of another significant hike as inflation remains stubbornly elevated. The decision marks a shift toward a more measured approach in balancing economic growth and price stability. Key Details Inflation Concerns: Annual inflation climbed to 8.9% in November, well above the central bank’s 4% target , with inflation expectations reaching 13.9% in December. Policy Rationale: The central bank cited the significant tightening of monetary conditions after October’s 200-basis point hike as sufficient to resume disinflationary processes. Governor Elvira Nabiullina emphasized avoiding both economic overheating and severe slowdowns. Economic Overheating: Elevated government spending on the war in Ukraine and social programs, coupled with labor shortages and rising wages, have fueled strong domestic demand, exacerbating price pressures...
Slowing inflation in Singapore has created some room for the Monetary Authority of Singapore (MAS) to ease monetary policy in January, but analysts believe the central bank may delay any action until later in 2025 to better assess the impact of US President-elect Donald Trump's policies.
Key Highlights
Inflation Outlook
- November core inflation is expected to hold steady at 2.1%, a three-year low, according to analysts in a Reuters poll.
- MAS has forecast core inflation at around 2% for Q4 2024, with DBS Bank predicting it to average 1.8% in 2025.
Monetary Policy Approach
- Singapore uses the Singapore dollar nominal effective exchange rate (S$NEER) to manage policy, adjusting the slope, midpoint, or width of the currency band.
- While some analysts expect an easing at the January review, a MAS survey showed the number of economists anticipating a reduction in the S$NEER slope dropped from 50% to one-third.
Analyst Perspectives
- DBS Bank: MAS is unlikely to ease in January and may wait to see Trump's policies in action.
- "Chances are MAS will mirror the Fed in basing decisions on actual policies rather than speculation," said DBS economist Chua Han Teng.
- Moody’s Analytics: MAS may wait for core inflation to fall below 2% for a few months before easing, giving time to assess global trade disruptions from US tariffs.
- Maybank: MAS could reduce the slope in January, as lower import prices from Trump’s tariffs on China may lead to a deflationary shock and further ease inflation.
Growth Projections
- Maybank’s Chua Hak Bin: Expects Singapore’s growth to slow to 2.6% in 2025 from 3.6% in 2024 amid trade flow disruptions.
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