SINGAPORE: The Monetary Authority of Singapore (MAS) said on Friday (Oct 12) it is “slightly” increasing the slope of the Singapore dollar nominal effective exchange rate (S$NEER) policy band in a “measured adjustment” to its monetary policy.
This marks the central bank’s second tightening move this year, after it slightly increased the slope of the policy band from zero per cent to allow for “modest and gradual” appreciation in its April policy review.
AdvertisementThis comes despite advance estimates from the Ministry of Trade and Industry (MTI) showing that Singapore's economic growth slowed to 2.6 per cent year-on year in the third quarter, down from 4.1 per cent in the previous three months.
[h=3]READ: Singapore's GDP growth slows to 2.6% in Q3, MTI advance estimates show[/h]MAS said its two other policy levers – the width and mid-point of the band – will remain unchanged.
In its latest biannual policy statement, the central bank said: “The Singapore economy is likely to remain on its steady expansion path in the quarters ahead, keeping output slightly above potential.
AdvertisementAdvertisement“MAS core inflation will experience modest but continuing pressures, before levelling off at just below 2 per cent over the medium term.”
The central bank said its “measured adjustment” on Friday is “consistent with a modest and gradual appreciation path of the S$NEER policy band that will ensure medium-term price stability”.
Instead of setting interest rates, the MAS manages the economy through the currency.
It lets the exchange rate float within an unspecified policy band, and changes the slope, width and centre of that band when it wants to adjust the pace of appreciation or depreciation of the Singapore currency.
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