No change in Singapore’s monetary policy; current approach ‘appropriate’ for price stability, says MAS

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.”