Singapore maintains tight monetary policy
Singapore’s central bank stuck to its tight monetary policy stance on April 14 despite weaker growth in the first quarter, saying core inflation will remain elevated as the economy grows at a moderate pace this year, Reuters reported.
In a widely expected decision, the Monetary Authority of Singapore (MAS) said it will maintain its policy of allowing a “modest and gradual” appreciation of the Singapore dollar, with no changes to the slope, width or center of the policy band.
The MAS trimmed its forecast for headline inflation in 2014 to 1.5-2.5 per cent, down from 2-3 per cent previously, but kept its forecast for core inflation, which excludes the changes in the prices of cars and accommodation, unchanged at 2-3 per cent.
The Singapore dollar dipped briefly after the MAS statement, but much of the weakness appeared to be linked to a broadly stronger US dollar. It was last trading down 0.3 per cent to 1.2521.
“The fact that we’ve seen the headline inflation forecast come off, I don’t think it’s too much of a surprise. It’s important to note that core inflation was kept the same,” said Daniel Wilson, an economist for ANZ. “The fact that core is still the same signals that inflation pressure is still on their mind,” he added.
Commenting on its outlook for headline inflation, the MAS said imputed rentals on owner-occupied accommodation are expected to stabilise and the impact of car prices on inflation will be negligible for the whole of 2014. Core inflation, meanwhile, is expected to pick up in coming months, the central bank said.
“Barring a significant shock in the external environment, the Singapore economy should expand at a moderate pace over the course of the year. Wage pressures will persist and firms are likely to pass on business costs to consumer prices. Consequently, MAS Core Inflation is expected to stay elevated,” the Monetary Authority of Singapore (MAS) said in its half-yearly statement.
“MAS will therefore maintain its policy of a modest and gradual appreciation of the policy band,” the MAS said, adding that it was keeping the slope, the width and the center of the band unchanged.
The MAS had been widely expected to maintain its policy of allowing a “modest and gradual” appreciation of the Singapore dollar to guard against inflationary pressures, as core inflation was expected to rise later this year due to wage cost pressures from a tight labour market.
Singapore's central bank stuck to its tight monetary policy stance on April 14 despite weaker growth in the first quarter, saying core inflation will remain elevated as the economy grows at a moderate pace this year, Reuters reported. In a widely expected decision, the Monetary Authority of Singapore (MAS) said it will maintain its policy of allowing a "modest and gradual" appreciation of the Singapore dollar, with no changes to the slope, width or center of the policy band. The MAS trimmed its forecast for headline inflation in 2014 to 1.5-2.5 per cent, down from 2-3 per cent previously, but...
Singapore’s central bank stuck to its tight monetary policy stance on April 14 despite weaker growth in the first quarter, saying core inflation will remain elevated as the economy grows at a moderate pace this year, Reuters reported.
In a widely expected decision, the Monetary Authority of Singapore (MAS) said it will maintain its policy of allowing a “modest and gradual” appreciation of the Singapore dollar, with no changes to the slope, width or center of the policy band.
The MAS trimmed its forecast for headline inflation in 2014 to 1.5-2.5 per cent, down from 2-3 per cent previously, but kept its forecast for core inflation, which excludes the changes in the prices of cars and accommodation, unchanged at 2-3 per cent.
The Singapore dollar dipped briefly after the MAS statement, but much of the weakness appeared to be linked to a broadly stronger US dollar. It was last trading down 0.3 per cent to 1.2521.
“The fact that we’ve seen the headline inflation forecast come off, I don’t think it’s too much of a surprise. It’s important to note that core inflation was kept the same,” said Daniel Wilson, an economist for ANZ. “The fact that core is still the same signals that inflation pressure is still on their mind,” he added.
Commenting on its outlook for headline inflation, the MAS said imputed rentals on owner-occupied accommodation are expected to stabilise and the impact of car prices on inflation will be negligible for the whole of 2014. Core inflation, meanwhile, is expected to pick up in coming months, the central bank said.
“Barring a significant shock in the external environment, the Singapore economy should expand at a moderate pace over the course of the year. Wage pressures will persist and firms are likely to pass on business costs to consumer prices. Consequently, MAS Core Inflation is expected to stay elevated,” the Monetary Authority of Singapore (MAS) said in its half-yearly statement.
“MAS will therefore maintain its policy of a modest and gradual appreciation of the policy band,” the MAS said, adding that it was keeping the slope, the width and the center of the band unchanged.
The MAS had been widely expected to maintain its policy of allowing a “modest and gradual” appreciation of the Singapore dollar to guard against inflationary pressures, as core inflation was expected to rise later this year due to wage cost pressures from a tight labour market.
