Singapore Monetary Stance Eased Slightly

October 15, 2015

From a tightening in April 2012 through the end of 2014, there had been no change in the policy of the Monetary Authority of Singapore.  Singaporean interest rate policy is subordinated to an exchange rate objective, defined by an allowed corridor of fluctuation in the trade-weighted S-dollar of specified slope, band width and band-midpoint.  Policy gets reviewed twice a year in April and October.  The tightening in April 2012 consisted of a steepening of the slope of appreciation and a narrowing of the band width but no change in its midpoint.  At an unscheduled meeting in January, officials announced a lower projected inflation outlook and in response reduced the slope of appreciation its the Singapore dollar’s target band, without changing the midpoint or width of that corridor.  The regularly scheduled April 2015 review made no further policy changes, but this week’s review repeated the decision of last January:  The band slope was again flattened, but the width and midpoint were kept as before.  Officials noted a weaker global economic environment and concluded that

  • “GDP growth in Singapore is likely to come in at around 2–2.5% in 2015 as a whole, with risks tilted towards the downside.  The economy is expected to expand at a broadly similar pace next year, with cyclical headwinds likely to persist into early 2016.”
  • A slight easing of degree in “the policy of a modest and gradual appreciation of the S$NEER policy band” and enable inflation “to pick up gradually over the course of 2016 towards its historical average…. CPI-All Items inflation is forecast to come in at around -0.5% in 2015, and -0.5–0.5% in 2016.”

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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