Singapore Monetary Policy


MAS tightens reins for a third time in one year

On 14 April, the Monetary Authority of Singapore (MAS) stated that it will re-centre the Singapore dollar policy band upwards ? with no immediate change to the slope or width of the band. According to MAS officials, the ?adjustment takes into account the tighter policy stance adopted in April and October last year, which will continue to have a restraining effect on the economy and prices?. In its statement, the MAS highlighted that its policy stance ?will ensure price stability in the medium term while keeping growth on a sustainable path?. The MAS conducts its monetary policy through the management of the exchange rate, rather than using interest rates. Monetary authorities review their policy twice a year and last tightened the reins on 14 October, when they widened the exchange rate policy band and increased its slope. The MAS announced the new measure at the same time as the Ministry of Trade and Industry (MTI) published better-than-expected growth in the first quarter, confirming an improvement in final demand after a temporary slowdown during the second half of last year. That said, a monetary tightening was broadly expected by market analysts, as inflation has hovered above the official 3.0 - 4.0% forecast for this year since December last year.

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