The Monetary Authority of Singapore (MAS) maintained a neutral monetary policy of zero appreciation for the trade-weighted Singapore dollar exchange rate on Friday, and reiterated its view that such a stance was “appropriate for an extended period”.
THE Monetary Authority of Singapore (MAS) maintained a neutral monetary policy of zero appreciation for the trade-weighted Singapore dollar exchange rate on Friday.
The central bank kept the mid-point and width of its policy band unchanged.
The MAS, which maintains the Singapore dollar nominal effective exchange rate (S$NEER) against a trade-weighted basket of currencies, said in a statement:
“MAS had indicated in the October 2016 MPS (monetary policy statement) that the neutral policy stance would be appropriate for an extended period. Given the economic outlook at this stage and consistent with medium-term price stability, MAS will maintain the rate of appreciation of the S$NEER policy band at zero per cent. The width of the policy band and the level at which it is centred will be unchanged.”
Market voices on:
The move matched market expectations. Before Friday’s announcement, most economists that The Business Times spoke to predicted that the central bank would hold firm on its neutral stance, which it has maintained since April 2016.
Explaining its decision, the MAS noted expectations for slower growth in 2018 and muted inflation expectations.
“The Singapore economy is likely to expand at a steady, but slightly slower, pace in 2018 compared to 2017,” the central bank said. “MAS core inflation is envisaged to be broadly stable throughout next year. Over the medium term, core inflation is expected to trend towards but average slightly below 2 per cent.”
Advanced estimates by the Ministry of Trade and Industry on Friday showed that the Singapore economy grew 6.3 per cent on a quarter-on-quarter seasonally adjusted annualised basis in the third quarter of 2017, up from 2.4 per cent in the second quarter.
The MAS expects GDP (gross domestic product) growth to stay “firm” in 2018.
Headline inflation for 2017 is expected to be about 0.5 per cent, the MAS said, and stay in the range of zero to one per cent in 2018.
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