The inflation rate slowed further in August, giving Singapore’s central bank (MAS) leeway to relax monetary policy next month by slowing down the appreciation of the Singaporean dollar, reported Asia One.
Singapore’s consumer price index increased by 3.9 percent in August compared to the same month in 2011. Although this figure is lower than July’s four percent, it is still higher than the 3.6 median forecast of 13 economists surveyed by Reuters.
Nonetheless, the figure for August was still the lowest in almost two years.
At the same time, the core inflation measure, excluding private-car and housing prices, inched up 2.2 percent. This is slightly less than anticipated and is slower than July’s 2.4 percent year-on-year pace.
Robert Prior-Wandesforde, an economist at Credit Suisse, said: “The most important element is the further drop in core inflation so it’s getting down to more acceptable levels as far as Monetary Authority of Singapore is concerned.”
“Put that together with growing prospects of a technical recession in Singapore, and I think you’ve got a recipe for policy easing at the meeting in mid-October,” he added.
Furthermore, MAS will release its half-yearly monetary-policy statement in October. There is a high chance that the central bank will relax its policy by slowing down the appreciation rate of the Singapore dollar, amidst concerns that the city-state could fall into a recession.
The central banks’ policy in April allowed the Singapore dollar to appreciate at slightly faster pace as a cushion against inflation.
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