Singapore's central bank upheld its monetary policy for the fifth straight meeting on Friday, even as it downgraded its inflation outlook.
The Monetary Authority of Singapore (MAS) opted to maintain the current rate of appreciation of the Singapore Dollar Nominal Effective Exchange Rate (S$NEER) policy band. There will be no adjustments to its width or the central level of the band.
The MAS utilizes the exchange rate, pegged against a basket of currencies within a non-disclosed band, as its primary monetary policy instrument. The last tightening of this policy occurred in October 2022.
Today, the MAS revised its headline inflation outlook down to a range of 2.0 to 3.0 percent for this year, from the previous forecast of 2.5 to 3.5 percent. The core inflation forecast remains unchanged at 2.5 to 3.5 percent.
The central bank stated that core inflation is anticipated to "step down more discernibly" in the fourth quarter of this year and continuing into 2025.
The easing of import price inflation and domestic price pressures, along with a moderation in labor cost growth, contributed to the reduction in inflation observed in the second quarter, the bank noted.
Economic growth is forecasted to gain momentum in the latter half of 2024. The MAS expects growth to align more closely with its potential rate of 2-3 percent for the entire year.
Shivaan Tandon, an economist at Capital Economics, suggested that policymakers might lower the slope of the nominal effective exchange rate band, indicating a preference for a slower pace of currency appreciation in the upcoming quarters.
