SINGAPORE: The Monetary Authority of Singapore (MAS) kept its exchange rate-based monetary policy unchanged on Monday (Jan 29), standing pat for the third consecutive meeting and in line with market expectations.
In its monetary policy statement, the Singapore central bank said it will “maintain the prevailing rate of appreciation” of its Singapore dollar nominal effective exchange rate (S$NEER) policy band.
There are no changes to the width of the policy band and the level at which it is centred.
All 13 analysts polled by Reuters had expected MAS to hold off making changes to its policy in this scheduled review.
The central bank said barring any further global shocks, the Singapore economy is expected to strengthen in 2024, with growth becoming more broad-based.
Core Inflation, which excludes the costs of accommodation and private transport, is likely to remain elevated in the earlier part of the year. However, it should decline gradually and step down by the fourth quarter before falling further next year, MAS said.
“Accordingly, current monetary policy settings remain appropriate,” it wrote in its statement.
“The sustained appreciation of the policy band will continue to dampen imported inflation and curb domestic cost pressures, thus ensuring medium-term price stability.”
MAS added that it will closely monitor global and domestic economic developments, while remaining vigilant to inflation and growth risks.
Unlike most central banks that manage monetary policy through the interest rate, MAS manages monetary policy by letting the local dollar rise or fall against the currencies of its main trading partners within an undisclosed band, known as the S$NEER.
It adjusts its policy by changing the slope, mid-point and width of the policy band.
Monetary policy had been left unchanged at the two policy reviews in 2023, with the last adjustment – a re-centering of the mid-point of its policy band – in October 2022.
This is the first time MAS is making a scheduled monetary policy statement in January, following an announcement last year that it would shift to a quarterly schedule, from semi-annual, in 2024.
As part of the change, monetary policy will be reviewed in January, April, July and October, instead of just April and October.
Economists have said that the increased frequency in policy reviews was likely spurred by a need to remain nimble in an increasingly uncertain world.
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In its monetary policy statement, the Singapore central bank said it will “maintain the prevailing rate of appreciation” of its Singapore dollar nominal effective exchange rate (S$NEER) policy band.
There are no changes to the width of the policy band and the level at which it is centred.
All 13 analysts polled by Reuters had expected MAS to hold off making changes to its policy in this scheduled review.
The central bank said barring any further global shocks, the Singapore economy is expected to strengthen in 2024, with growth becoming more broad-based.
Core Inflation, which excludes the costs of accommodation and private transport, is likely to remain elevated in the earlier part of the year. However, it should decline gradually and step down by the fourth quarter before falling further next year, MAS said.
“Accordingly, current monetary policy settings remain appropriate,” it wrote in its statement.
“The sustained appreciation of the policy band will continue to dampen imported inflation and curb domestic cost pressures, thus ensuring medium-term price stability.”
MAS added that it will closely monitor global and domestic economic developments, while remaining vigilant to inflation and growth risks.
Related:
Unlike most central banks that manage monetary policy through the interest rate, MAS manages monetary policy by letting the local dollar rise or fall against the currencies of its main trading partners within an undisclosed band, known as the S$NEER.
It adjusts its policy by changing the slope, mid-point and width of the policy band.
Monetary policy had been left unchanged at the two policy reviews in 2023, with the last adjustment – a re-centering of the mid-point of its policy band – in October 2022.
This is the first time MAS is making a scheduled monetary policy statement in January, following an announcement last year that it would shift to a quarterly schedule, from semi-annual, in 2024.
As part of the change, monetary policy will be reviewed in January, April, July and October, instead of just April and October.
Economists have said that the increased frequency in policy reviews was likely spurred by a need to remain nimble in an increasingly uncertain world.
Continue reading...