Singapore: MAS stands pat at October meeting, leaves policy band unchanged
October 13, 2017
At its second semi-annual meeting this year on 13 October, the Monetary Authority of Singapore (MAS) decided to leave the rate of appreciation of the Singapore dollar nominal effective exchange rate (S$NEER) policy band unchanged at zero percent. The MAS also left both the width of the policy band and the level at which it is centered unchanged, in line with market expectations. Amid subdued inflationary pressures as the MAS pursues an accommodative stance, the slope has been kept at a zero percent appreciation rate since April 2016.
The MAS’s decision was driven by a moderate outlook for Singapore’s economy, as well as weak price pressures. Although advance estimates for GDP revealed buoyant growth in the third quarter, activity was uneven and growth is expected to moderate next year. Activity in the electronics industry is expected to wane, and the labor market is weak. There are also downside risks from slower momentum in China’s economy and softer credit conditions. Economic slack is also visible in recent soft inflation data: Inflation came in at a low 0.4% in August, driving the Central Bank to stay put.
The overall tone of the communiqué was quite dovish, as the MAS took a more cautious tone on global growth compared to most other central banks. However, the MAS did acknowledge the recent positive dynamics in the economy and altered a phrase that called for an accommodative policy for an extended period of time.
The next meeting is scheduled for April 2018.