By Ronnie Harui
SINGAPORE–The Monetary Authority of Singapore left its monetary policy unchanged in a widely expected move on Friday.
The central bank said it will maintain the prevailing rate of appreciation of the SGD NEER policy band, as the current path of appreciation is assessed to be sufficiently tight. A sustained appreciation of the policy band is necessary to dampen imported inflation and curb domestic cost pressures, thereby ensuring medium-term price stability, the MAS said.
All 15 economists and analysts surveyed by The Wall Street Journal had expected the MAS to keep its policy unchanged. The MAS’s monetary policy is centered on Singapore’s exchange rate, which it considers an effective tool for maintaining price stability in the small and open economy.
There will be no change to the width and the level at which the policy band is centered, the central bank said. The MAS said it will closely monitor global and domestic economic developments amid uncertainty over both inflation and growth.
Singapore’s central bank will also shift to a quarterly monetary policy statement schedule from 2024, with statements to be released in January, April, July and October, the MAS said. The next statement will be released in late January, it added.
For 2023, Singapore’s core inflation is forecast at around 4%, unchanged from the 2022 level, the MAS said. For 2024, core inflation should be on a broad moderating trend, and is projected to slow to an average of 2.5%-3.5%, the central bank added.
Singapore’s headline inflation should average around 5% in 2023, down from 6.1% in 2022, the MAS said. For 2024, headline inflation is projected to average between 3.0% and 4.0%.
Meanwhile, the Ministry of Trade and Industry’s advance estimates showed Singapore’s gross domestic product expanded 1.0% on a quarter-on-quarter seasonally adjusted basis in the third quarter, up from 0.1% growth in the second quarter. Growth picked up on the back of an improvement in the manufacturing sector, while activity in some domestic-oriented sectors eased, the MAS said.
For 2023, Singapore’s GDP growth is expected to come in at the lower half of a 0.5%-1.5% forecast range, the MAS said. For 2024, growth is projected to be closer to its potential rate, with the output gap remaining slightly negative, the central bank said, without elaborating.
Write to Ronnie Harui at [email protected]
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