Singapore further tightens monetary policy

Singapore, July 14

The Monetary Authority of Singapore (MAS) on Thursday further tightened its policy stand by raising the mid-point of the Singapore dollar Nominal Effective Exchange Rate (S$NEER) policy band to its prevailing level to fight price pressures.

According to the newly-published MAS Monetary Policy Statement, the authority kept the slope and width of the policy band unchanged.

This policy move, building on previous tightening moves, should help slow the momentum of inflation and ensure medium-term price stability, Xinhua news agency reported quoting the MAS statement.

Since October 2021, MAS has been progressively tightening monetary policy as the economic recovery consolidated and inflationary pressures picked up. Last October, the authority slightly increased the rate of appreciation of the S$NEER policy band as a pre-emptive move in light of the pick-up in inflation.

This January, the MAS added slightly to the rate of appreciation of the band. In April, the MAS re-centered upwards the S$NEER policy band and further increased its rate of appreciation.

The MAS said in its new policy statement that Singapore's GDP growth is projected to come in at the lower half of the 3-5 per cent forecast range for 2022 as a whole, as slowing external growth momentum will weigh on the country's trade-related sectors in the second half of the year, but the domestic-oriented and travel-related sectors are expected to continue their recovery and support economic expansion.

As for 2023, in tandem with a weaker global economic environment, the MAS said that Singapore's GDP growth would moderate further.

Meanwhile, the MAS lifted its 2022 forecast range of MAS core inflation to 3-4 per cent from 2.5-3.5 per cent expected in April, and that of CPI-All Items inflation to 5-6 per cent from 4.5-5.5 per cent.