Singapore tightens monetary policy slightly
SINGAPORE, April 13 — Singapore’s central bank today tightened monetary policy slightly by saying it will let its currency appreciate at a slightly faster pace.
The Monetary Authority of Singapore (MAS) also said it was revising its forecast for full-year all-items inflation to 3.5 to 4.5 per cent from 2.5 to 3.5 per cent.
“Core inflationary pressures have persisted, but will likely ease in the latter half of the year,” MAS said in its half-yearly monetary policy statement.
MAS said it would “continue with the policy of a modest and gradual appreciation of the Singapore dollar nominal effective exchange (NEER) rate policy band” but added that the slope will be increased slightly.
It added there will be no change to the level at which the band is centred, it said.
“MAS is also restoring a narrower policy band. This policy stance will help anchor inflation expectations, ensure medium-term price stability, and keep growth on a sustainable path.”
Sixteen of 17 forecasters polled by Reuters had expected MAS to stand pat on policy, while one saw a 50 per cent chance the central bank would let the currency strengthen at a faster pace.
Singapore manages monetary policy by letting the its dollar rise or fall in a undisclosed band against a secret trade-weighted basket of currencies of its main trading partners.
At its previous policy review in October, MAS reduced the slope of the policy band, essentially slowing the pace of Singapore dollar appreciation to take into consideration the slowing economy and an easing in inflationary pressures.
The central bank has since conceded that price pressures have been more persistent than expected. — Reuters