Lavish budget makes another MAS easing more likely

Blame it on benign inflation.

Singapore’s lavish Jubilee Budget will ease inflation pressures further, thanks to healthcare and education subsidies, service and conservancy rebates, and the deferral of this year’s round of foreign worker levies.

This comes after three straight months of deflation. Singapore’s CPI has been in the red since November, weighed down mainly by lower oil prices.

According to Bank of America Merrill Lynch, the threat of deflation may push the Monetary Authority of Singapore to ease again in its policy meeting in April.

“Budget will ease inflation pressures further, with exception of higher petrol duties. This may increase the likelihood of further MAS easing (via re-centering) in April, if growth weakens,” stated BofAML.