The Monetary Authority of Singapore (MAS) has maintained its current monetary policy according to the outcomes of its first policy meeting of the year. This decision was made based on forecasts of declining inflation and an expected uptick in economic growth for the coming year.
The MAS has opted to keep the current rate of appreciation for the S$NEER policy band unchanged. There will also be no modifications to its width and the point at which it is centered. For its monetary policy mechanism, the MAS utilizes the exchange rate against an undisclosed range of currencies.
Starting this year, the central bank has moved to a quarterly meeting schedule. Comparatively, in previous years, there were only two policy meetings annually. Nicholas Mapa, an economist at ING, believes that increasing the number of meetings to four per year allows the MAS more scope to modify monetary policy settings when required.
This schedule alteration indicates that there could be a potential adjustment in policy before this year's fourth quarter, according to Mapa.
In the first part of this year, the MAS anticipates core inflation to remain high, but it should gradually decrease and drop further in the fourth quarter, with an additional easing anticipated in 2025.
Shivaan Tandon, an economist from Capital Economics, predicts that the MAS will likely ease its policy stance in April, citing weakening growth and reduced inflation worries.
The overall inflation for 2024 is predicted to be between 2.5 and 3.5 percent, which is lower than the earlier projected range of 3-4 percent. If the impact of the increase in the GST rate is excluded, headline inflation is projected to be between 1.5 and 2.5 percent.
Last year, the economy of the city-state is estimated to have grown by 1.2 percent. Growth in GDP is expected to gain momentum this year, with projections estimating a growth of between 1.0 percent and 3.0 percent.
