SINGAPORE: The Monetary Authority of Singapore (MAS) on Friday (Apr 12) kept its exchange rate-based monetary policy unchanged after tightening twice last year, in line with market expectations.
In a statement for its semi-annual policy review, the central bank said it will maintain the current rate of appreciation of the Singapore dollar's nominal effective exchange rate (S$NEER) policy band.
AdvertisementIt will also be leaving the width and the level at which the band is centred unchanged.
“This policy stance is consistent with a modest and gradual appreciation path of the S$NEER policy band that will ensure medium-term price stability,” said the MAS.
MAS operates a managed float regime for the Singapore dollar, allowing the exchange rate to fluctuate within an unspecified policy band, rather than to a fixed value.
It changes the slope, width and centre of that band when it wants to adjust the pace of appreciation or depreciation of the Singapore currency.
AdvertisementAdvertisementLast April, the central bank made its first tightening move in six years by slightly increasing the slope of the policy band from zero per cent to allow for “a modest and gradual” appreciation.
When it met again in October, the MAS tightened a second time.
But amid external headwinds and dimming domestic conditions, economists did not think a third tightening move would be a charm.
Core inflation – a measure closely watched by central bankers – eased to a nine-month low of 1.5 per cent in February.
Advance estimates out on Friday morning showed Singapore's economic growth slowed to year-on-year growth of 1.3 per cent for the first quarter, following a contraction in the key manufacturing sector.
“GDP growth in the Singapore economy has eased, bringing the level of output closer to its underlying potential. Despite some pickup in labour costs, inflationary pressures are mild and should remain contained," said MAS in its policy review.
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