The Monetary Authority of Singapore (MAS) said it would maintain the prevailing rate of appreciation in its policy range based on the exchange rate, known as the nominal effective exchange rate.
The band’s central width and level remain the same.
“Barring any further global shocks, Singapore’s economy is expected to see more broadly strengthened growth in 2024. MAS core inflation is likely to remain high in the first half of this year, but decline gradually. and should decline by the fourth quarter ‘before further declines next year,’ MAS said in a statement.
Maybank economist Chua Hak Bin said Maybank will maintain its current tightening bias as core and headline inflation are both above 3%, at historically comfortable levels. He said there was.
Core inflation in December was 3.3% year-on-year, slowing from a peak of 5.5% early last year.
MAS said the core inflation rate rose this quarter but is expected to average 2.5-3.5% in 2024, citing a “temporary impact” from the 1 percentage point hike in consumption tax from January. He said he expected the situation to ease.
According to preliminary estimates released by the Ministry of Trade in early January, gross domestic product (GDP) grew at an annual rate of 2.8% in the fourth quarter of last year.
Full-year GDP in 2023 is expected to be 1.2%, and the Ministry of Trade expects GDP growth in 2024 to be between 1% and 3%.
“The outlook for Singapore’s economy should continue to improve in 2024,” MAS said, although upside and downside risks to the inflation outlook remain.
OCBC economist Serena Lin said this suggested MAS was extending the policy suspension for the time being.
“Monetary policy is likely to remain on hold again in April, and the earliest opportunity for easing could only come later this year, when core inflation eases more convincingly,” he said. Ta.
Monday’s MAS policy decision was the first under the central bank’s new review schedule, which will see it issue policy announcements quarterly rather than semi-annually.
The central bank kept monetary policy on hold in April and October last year to reflect growth concerns, and had previously tightened it in five consecutive reviews.
Singapore, a highly trade-dependent economy, has a unique way of managing monetary policy, adjusting the dollar’s exchange rate against a basket of currencies rather than domestic interest rates like most other countries.