Singapore tightens monetary policy for third time to deal with inflation

Singapore - The Monetary Authority of Singapore (MAS) on April 14 tightened monetary policy, the third time since October 2021, with the aim to combat inflation that is expected to heat up.

Selena Ling, chief economist and head of treasury research and strategy at OCBC Bank, said that this tighter monetary policy stance, which builds on the policy moves in October 2021 and January 2022, will slow the inflation momentum and help ensure medium-term price stability.

In its half-yearly monetary policy statement, the Singapore central bank said it will re-centre the mid-point of its exchange rate policy band at the prevailing level of the Singdollar nominal effective exchange rate.

It will also increase slightly the rate of appreciation of the band to exert a continuing dampening effect on inflation. This marks the third consecutive steepening in the slope since October last year.

The Singapore dollar jumped about 0.5 percent to 1.3555 per US dollar immediately after the MAS move.

MAS also raised its inflation forecasts, with core inflation now projected to come in at 2.5 percent to 3.5 percent this year, from the 2 percent to 3 percent expected in January. Meanwhile, overall inflation is forecast at 4.5 percent to 5.5 percent, from the earlier range of 2.5 percent to 3.5 percent.