According to MAS, the monetary policy will be left unchanged. The authority is now maintaining its current stance after a series of tightening measures since 2021 to combat inflation.
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In its half-yearly monetary statement, MAS described its policy stance as appropriate to secure medium-term price stability while still flagging the risk of a deeper economic slowdown.
Because of this, MAS will maintain the prevailing rate of appreciation of its Singapore dollar nominal effective exchange rate policy band.
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Previously, the central bank tightened SG’s monetary policy five times. The most recent one was in October.
Additionally, MAS did not change the width and mid-point of the band. Unlike other central banks that target interest rates, MAS lets the local dollar fall or rise against the currencies of its main trading partners within a band that’s not disclosed.
“With imported inflation turning more negative and core inflation expected to ease materially by end-2023, MAS has assessed that the current appreciating path of the S$NEER policy band is sufficiently tight and appropriate for securing medium-term price stability,” the central bank’s policy statement read.
“This policy stance will continue to reduce imported inflation and help curb domestic cost pressures.”
Meanwhile, headline inflation for 2023 will come between 5.5% and 6.5%. Core inflation is expected to be between 3.5% to 4.5%.
An economic slowdown is also expected in the first quarter of this year.
“MAS will remain vigilant over developments in the economy and financial markets, amid heightened uncertainty on both inflation and growth,” the central bank stated.
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