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Singapore Central Bank Tightens Policy Amid Solid Growth

The Monetary Authority of Singapore building in Singapore. (File photo: Reuters/Edgar Su)

By Michelle Jamrisko

Singapore’s central bank tightened monetary policy on Friday, changing its stance for the first time in two years amid solid economic growth prospects for 2018.

The Monetary Authority of Singapore, which uses the exchange rate as its main policy tool, increased the slope of the currency band slightly from zero percent, it said in a statement on its website. The majority of economists in a Bloomberg survey predicted a steeper slope, signaling the MAS would seek an appreciation in the Singapore dollar.

“The Singapore economy has evolved as envisaged since the October 2017 policy review, and should continue on a steady expansion path in 2018,” the MAS said. “However, an escalation of the U.S.-China trade dispute remains possible, and if it occurs, will have significant consequences for global trade.”

In a separate report on Friday, the trade ministry said preliminary data showed gross domestic product grew 4.3 percent in the first quarter from a year ago, in line with the median estimate in a Bloomberg survey.

The Bloomberg survey on the MAS decision showed economists were more divided than at any time in three years, underlining the difficulty policy makers had in weighing the latest tension between the U.S. and China — Singapore’s two top trading partners — against positive developments in the domestic economy.

Inflation has picked up recently even though it remains at subdued levels. Consumer prices rose 0.5 percent in February from a year ago, while the MAS’s core gauge increased to 1.7 percent. The MAS said core inflation will reach the upper half of its 1 percent to 2 percent forecast range this year.

“The Singapore economy is likely to remain on its steady expansion path in 2018,” according to the statement. “Upward pressures on MAS Core Inflation are expected to persist over the course of this year and beyond, underpinned by an improving labour market.”

The central bank guides the local dollar against a basket of its counterparts and adjusts the pace of its appreciation or depreciation by changing the slope, width and center of a currency band. It doesn’t disclose details on the basket, or the band or the pace of appreciation or depreciation.

With assistance from Myungshin Cho and Masaki Kondo. To contact the reporter on this story: Michelle Jamrisko in Singapore at To contact the editor responsible for this story: Nasreen Seria at

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