Monetary Authority Of Singapore Pauses Policy Tightening

(RTTNews) - Singapore's central bank kept its policy stance unchanged on Friday as policymakers assessed that the past five successive tightening was sufficient to curb imported inflation and to bring medium-term price stability.

The Monetary Authority of Singapore, or MAS, decided to maintain the prevailing rate of appreciation of the S$NEER policy band. There will be no change to its width and the level at which it is centered.

Policymakers observed that the effects of the monetary policy tightening are still working through the economy and should dampen inflation further.

The current stance will continue to reduce imported inflation and assist in curbing domestic cost pressures, the bank said.

Rate-setters assessed that the current appreciating path is sufficiently tight and appropriate to secure medium-term price stability.

The MAS applies the exchange rate against a basket of currencies within an undisclosed band as its monetary policy tool.

The central bank holds two monetary policy meetings a year, in April and October. The MAS has tightened the policy five straight times including out-of-cycle moves last year in January and July.

With inflation set to fall steadily, a considerable degree of monetary tightening already in the pipeline and the economy under severe pressure, the latest decision marked an end to the tightening cycle, Capital Economics economist Shivaan Tandon said.

For the whole year of 2023, MAS core inflation is expected to average 3.5-4.5 percent. At the same time, overall consumer price inflation is forecast to come in higher at 5.5-6.5 percent.

Data released by the Ministry of Trade and Industry today showed that the city-state economy contracted 0.7 percent sequentially in the first quarter, following the marginal 0.1 percent growth in the preceding quarter.

The MAS forecast economic growth to be below trend this year. Growth is projected to step down to 0.5-2.5 percent in 2023, from 3.6 percent last year.