SINGAPORE: The Monetary Authority of Singapore (MAS) left its monetary policy unchanged on Friday (Apr 14), hitting the pause button on a series of tightening moves it began since October 2021 to combat rising inflation.
In its half-yearly monetary policy statement, the central bank said it would “maintain the prevailing rate of appreciation” of its Singapore dollar nominal effective exchange rate (S$NEER) policy band.
The width and the mid-point of the band were also left unchanged.
The move to stand pat was anticipated by only six out of 17 analysts polled by Reuters. Most analysts had expected the central bank to tighten its policy yet again to tame persistent elevated inflation.
The central bank tightened monetary policy five times previously, most recently in October when it did a re-centering of the mid-point of its policy band.
MAS said its five successive monetary policy tightening moves since October 2021 have “tempered the momentum of price increases”, with the effects of these past moves “still working through the economy and should dampen inflation further”.
“With imported inflation turning more negative and core inflation expected to ease materially by end-2023, MAS has assessed that the current appreciating path of the S$NEER policy band is sufficiently tight and appropriate for securing medium-term price stability,” the central bank's policy statement said.
“This policy stance will continue to reduce imported inflation and help curb domestic cost pressures.”
It also noted that Singapore’s economic growth is projected to be “below trend” this year, with the slowdown possibly being “deeper than anticipated” due to intensifying risks to the global economy.
“MAS will remain vigilant over developments in the economy and financial markets, amid heightened uncertainty on both inflation and growth,” the central bank said.
Unlike most central banks which target interest rates, the 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$NEER.
It adjusts its policy by changing the slope, mid-point and width of the policy band.
The monetary policy decision comes alongside official advance estimates that showed the Singapore economy slowing down in the first quarter of 2023.
The economy grew by 0.1 per cent year on year, missing market estimates and coming in much slower than the 2.1 per cent growth recorded in the previous quarter. On a quarter-on-quarter seasonally-adjusted basis, gross domestic product shrunk by 0.7 per cent, a reversal from the 0.1 per cent expansion in the earlier three months.
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In its half-yearly monetary policy statement, the central bank said it would “maintain the prevailing rate of appreciation” of its Singapore dollar nominal effective exchange rate (S$NEER) policy band.
The width and the mid-point of the band were also left unchanged.
The move to stand pat was anticipated by only six out of 17 analysts polled by Reuters. Most analysts had expected the central bank to tighten its policy yet again to tame persistent elevated inflation.
The central bank tightened monetary policy five times previously, most recently in October when it did a re-centering of the mid-point of its policy band.
MAS said its five successive monetary policy tightening moves since October 2021 have “tempered the momentum of price increases”, with the effects of these past moves “still working through the economy and should dampen inflation further”.
“With imported inflation turning more negative and core inflation expected to ease materially by end-2023, MAS has assessed that the current appreciating path of the S$NEER policy band is sufficiently tight and appropriate for securing medium-term price stability,” the central bank's policy statement said.
“This policy stance will continue to reduce imported inflation and help curb domestic cost pressures.”
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It also noted that Singapore’s economic growth is projected to be “below trend” this year, with the slowdown possibly being “deeper than anticipated” due to intensifying risks to the global economy.
“MAS will remain vigilant over developments in the economy and financial markets, amid heightened uncertainty on both inflation and growth,” the central bank said.
Unlike most central banks which target interest rates, the MAS manages monetary policy by letting the local dollar rise or fall against the currencies of its main trading partners within an undisclosed band, known as the S$NEER.
It adjusts its policy by changing the slope, mid-point and width of the policy band.
The monetary policy decision comes alongside official advance estimates that showed the Singapore economy slowing down in the first quarter of 2023.
The economy grew by 0.1 per cent year on year, missing market estimates and coming in much slower than the 2.1 per cent growth recorded in the previous quarter. On a quarter-on-quarter seasonally-adjusted basis, gross domestic product shrunk by 0.7 per cent, a reversal from the 0.1 per cent expansion in the earlier three months.
Continue reading...