SINGAPORE: The Monetary Authority of Singapore (MAS) is reducing the pace of the Singapore dollar’s appreciation “slightly”, in line with market expectations amid subdued growth and low inflation.
It will, however, leave the width and the level at which the Singapore dollar's nominal effective exchange rate (S$NEER) policy band is centred unchanged, it said in a statement on its semi-annual policy review on Monday (Oct 14).
AdvertisementAdvertisement“This measured adjustment to the policy stance is consistent with medium-term price stability, given the current economic outlook,” noted the central bank.
“MAS will continue to closely monitor economic developments and is prepared to recalibrate monetary policy should prospects for inflation and growth weaken significantly.”
[h=3]READ: Singapore economy grows 0.1% in Q3, avoids technical recession[/h]In a separate release from the Ministry of Trade and Industry on Monday morning, the Singapore economy dodged a technical recession by growing 0.6 per cent on a quarter-on-quarter seasonally adjusted annualised basis.
AdvertisementAdvertisementThis marked a recovery from the 2.7 per cent contraction in the previous quarter, but missing expectations for growth of 1.5 per cent based on 11 economists polled by Reuters.
From a year ago, growth remained tepid at 0.1 per cent.
Instead of setting interest rates, the MAS operates a managed float regime for the Singapore dollar, allowing the exchange rate to fluctuate within an unspecified policy band.
It changes the slope, width and centre of that band when it wants to adjust the pace of appreciation or depreciation of the Singapore currency.
[h=3]READ: Singapore, Malaysia added to US watchlist on currency practices[/h][h=3]READ: Singapore added to US currency watchlist: What you need to know[/h]Monday’s move marks the central bank’s first easing move since April 2016 when it flattened the S$NEER slope to zero per cent.
The MAS held on to that “neutral” stance for two years before tightening twice in 2018 to allow for “a modest and gradual” appreciation.
Amid the headwinds of trade tensions and moderating global growth, it opted to stand pat six months ago.
Since then, economists have raised their bets for MAS to loosen its exchange-rate based monetary policy this month with all 11 economists polled by Reuters expecting a slight easing on Monday.
[h=3]READ: After Fed’s rate cut, where are Singapore interest rates and home loans headed?[/h]Let's block ads! (Why?)
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