The Monetary Authority of Singapore (MAS) kept its exchange rate-based monetary policy unchanged on Friday (Oct 13), doing so for the second time this year and in line with market expectations.
In its half-yearly monetary policy statement, the Singapore central bank said it will “maintain the prevailing rate of appreciation” of its Singapore dollar nominal effective exchange rate (S$NEER) policy band.
There are no changes to the width of the policy band and the level at which it is centred.
All 15 analysts polled by Reuters had expected MAS to hold off making changes to its policy in this scheduled review.
MAS said Singapore’s economic growth is expected to improve gradually over 2024, although it warned that recovery could weaker than expected given an uncertain global economic outlook.
It also noted that core inflation – a key consumer price gauge for the central bank – has slowed and is projected to broadly decline over the course of next year.
“Against this backdrop, the current appreciating path of the S$NEER policy band is assessed to be sufficiently tight,” it said.
“A sustained appreciation of the policy band is necessary to dampen imported inflation and curb domestic cost pressures, thus ensuring medium-term price stability.”
MAS added that it will monitor global and domestic economic developments closely amid uncertainties in inflation and growth.
Unlike most central banks that manage monetary policy through the interest rate, MAS manages monetary policy by letting the local dollar rise or fall against the currencies of its main trading partners within an undisclosed band, known as the Singapore dollar nominal effective exchange rate (S$NEER).
It adjusts its policy by changing the slope, mid-point and width of the policy band.
