NEXT MOVE?
Alex Holmes, senior economist at Oxford Economics, said he
does not expect any unwinding of recent tightening moves until
late 2024.
"However, the weakness of the economy means there is risk of
decreasing the slope of the policy band at next year's April
meeting," he said.
Oxford Economics has downgraded their GDP forecast for 2023
after Friday’s data.
The core inflation rate — the central bank's preferred price
measure - rose to 5.5% in January and February on a year-on-year
basis and is at its highest since November 2008.
Gross domestic product (GDP) was up 0.1% in January-March on
a year-on-year basis, according to advance estimates from the
Ministry of Trade and Industry also released on Friday.
On a quarter-on-quarter seasonally adjusted basis, GDP
contracted 0.7% in the first quarter.
(Reporting by Xinghui Kok, Chen Lin; Editing by Sam Holmes and
Martin Petty)
(Recasts, adds quotes)
SINGAPORE, April 14 (Reuters) - Singapore's central bank
on Friday left its monetary policy settings unchanged,
reflecting the city-state's concerns about its growth outlook
and surprising economists who had expected another round of
tightening.
The announcement came as Singapore's economic growth for the
first quarter missed expectations.
It was the first time the Monetary Authority of Singapore
(MAS) has left policy unchanged since April 2021. MAS had from
October 2021 tightened monetary policy five times in a row,
including in two off-cycle tightening moves last year in January
and July.
Singapore joins economies such as Australia, India, South
Korea and Canada that have recently paused sustained policy
tightening campaigns as fresh concerns about global growth
overshadow worries about persistently high inflation.
The MAS said in a statement that its previous tightening
moves were "still working through the economy and should dampen
inflation further".
Maybank economist Chua Hak Bin said the balance of risks for
Singapore had shifted to growth concerns despite
elevated core inflation.
"Singapore’s small and open economy is starting to stagnate
and feeling the full brunt of the global downturn," he said,
adding that there was a risk of Singapore slipping into a
technical recession if China’s reopening boost does not
materially materialise in the second quarter.
The Singapore dollar initially fell more than 0.4%
against the U.S. dollar after the MAS decision.
Instead of interest rates, the MAS manages policy by letting
the local dollar rise or fall against the currencies of its main
trading partners within the S$NEER.
MAS said in a statement that it had "assessed that the
current appreciating path of the S$NEER policy band is
sufficiently tight and appropriate for securing medium-term
price stability."
There will be no change to the slope and width of the policy
band, known as the nominal effective exchange rate, or S$NEER.
In an earlier poll by Reuters, only six of 17 economists
expected to see no change and most thought there would be
another round of tightening amid persistent price pressures in
the Asian financial hub.
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