The Monetary Authority of Singapore (MAS) announced Wednesday that it will adjust the monetary policy to allow a slower pace in the appreciation of the Singapore dollar.
The revision announcement came as a surprise to market watches as the central bank is only expected to release its next monetary policy revision in April.
In a statement, MAS said it will maintain the policy of a modest and gradual appreciation of the Singapore dollar against other currencies. However, it also said will reduce the slope of the policy band, “with no change to its width and the level at which it is centred.”
“This measured adjustment to the policy stance is consistent with the more benign inflation outlook in 2015 and appropriate for ensuring medium-term price stability in the economy,” MAS said.
According to MAS, the previous policy stance – which has been in place since April 2012 – was assessed to be appropriate for containing domestic and imported sources of inflation and for anchoring inflation expectations. However, the outlook for inflation has shifted significantly mainly due to the decline in global oil prices, it said.
With this, the agency also revised its inflation forecast for 2015. From the previous outlook of 0.5 to 1.5 percent for CPI-All Items inflation or headline inflation, MAS now looks at a lowered outlook of -0.5 to 0.5 percent.
Meanwhile, core inflation is expected to be at 0.5 to 1.5 percent this year, down from the earlier forecast range of 2 to 3 percent.
In terms of economic growth, MAS said Singapore remains on track to grow at a moderate pace of 2 to 4 percent this year.
“MAS will continue to be vigilant over developments in the external environment and their impact on the domestic economy, and stands ready to curb sharp movements in the Singapore dollar nominal effective exchange rate,” it added.
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg.
