The Monetary Authority of Singapore (MAS) kept its exchange rate-based monetary policy unchanged on Friday (Oct 13), doing so for the second time this year and in line with market expectations.

In its half-yearly monetary policy statement, the Singapore central bank said it will “maintain the prevailing rate of appreciation” of its Singapore dollar nominal effective exchange rate (S$NEER) policy band.

There are no changes to the width of the policy band and the level at which it is centred.

All 15 analysts polled by Reuters had expected MAS to hold off making changes to its policy in this scheduled review.

MAS said Singapore’s economic growth is expected to improve gradually over 2024, although it warned of a weaker than expected recovery given an uncertain global economic outlook.

Core inflation — a key consumer price gauge for MAS — has slowed and is projected to broadly decline over the course of next year.

“Against this backdrop, the current appreciating path of the S$NEER policy band is assessed to be sufficiently tight. A sustained appreciation of the policy band is necessary to dampen imported inflation and curb domestic cost pressures, thus ensuring medium-term price stability,” it said.

MAS noted that it will monitor global and domestic economic developments closely.

Unlike most central banks that manage monetary policy through the interest rate, 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 Singapore dollar nominal effective exchange rate (S$NEER).

It adjusts its policy by changing the slope, mid-point and width of the policy band.

The MAS left monetary policy unchanged earlier in April, while flagging the risk of a “deeper than anticipated” slowdown in the Singapore economy.

Separate data released on Friday showed the Singapore economy grew 0.7 per cent year-on-year in the third quarter, an uptick from the 0.5 per cent growth in the previous quarter.

On a quarter-on-quarter seasonally-adjusted basis, gross domestic product expanded by 1 per cent, picking up pace after growing marginally by 0.1 per cent during the April to June quarter.

Policymakers last revised their growth forecast in August. They expect the economy to grow between 0.5 to 1.5 per cent this year.

MONETARY POLICY TO BE ANNOUNCED QUARTERLY NEXT YEAR

MAS also announced that it is shifting to a quarterly monetary policy statement schedule from 2024.

Statements will be released in January, April, July, and October.

Currently, it does so on a half-yearly basis, with statements typically expected in April and October.

The change is part of MAS’ “continuing efforts to enhance monetary policy communications”, adding that it “continues to uphold a medium-term orientation in its policy formulation to secure low and stable inflation”.

The next monetary policy is set for late January 2024. CNA

For more reports like this, visit cna.asia.

Source:
courtesy of TODAY

by TANG SEE KIT

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