After tightening policy twice last year, the Monetary Authority of Singapore (MAS), which uses the exchange rate as its main policy tool, left the slope and width of the currency band unchanged, as well as the level at which it is centred.
Sunday 14, April 2019
(Bloomberg) --Singapore’s central bank kept its monetary policy settings unchanged last week, striking a dovish tone as it sees the economy growing below potential.
In a statement, MAS said that the stance is consistent with a modest and gradual appreciation path of the currency band.
“Growth in the Singapore economy has eased, bringing the level of output closer to its underlying potential, despite some pickup in labour costs, inflationary pressures are mild and should remain contained,” the MAS said.
Selena Ling, an economist at Oversea-Chinese Banking Corporation in Singapore, said, “The growth and inflation rhetoric has come off quite a fair bit, after last year’s tightening they’re in pause mode now.”
Central banks globally have taken an abrupt turn toward more dovish policy in 2019, led by a change in tone from the US Federal Reserve. World growth forecasts have been repeatedly downgraded, including by the International Monetary Fund (IMF) last week, as US-China trade tensions remain heightened and as Chinese demand ebbs.
The government is projecting growth in the export-reliant economy will slow to just below the midpoint of the 1.5 to 3.5 per cent range after a 3.2 per cent pace in 2018.
The MAS sees growth at slightly below potential this year, following two years when it was above trend.” That implies a softer inflation picture as well, allowing policy makers to stay on hold.