Singapore central bank leaves monetary policy unchanged

Monetary Authority of Singapore with a surprise, a tightening was widely expected.

• Will maintain the prevailing rate of appreciation of the S$NEER policy band
• There will be no change to its width and the level at which it is centred
• Will be no change to its width and the level at which it is centred

Headlines via Reuters

• This policy stance will continue to reduce imported inflation and help curb domestic cost pressures
• Says for 2023 as a whole, MAS core inflation is expected to average 3.5–4.5%
• Singapore’s GDP growth is projected to step down to 0.5–2.5% in 2023, from 3.6% last year
• Will remain vigilant over developments in economy & financial markets, amid heightened uncertainty on both inflation and growth
• Prospects for Singapore's GDP growth this year have dimmed
• Says mas CPI-all items inflation is forecast to come in higher at 5.5–6.5% for 2023
• Assessed that current appreciating path of S$NEER policy band is sufficiently tight, appropriate for securing medium-term price stability
• Effects of MAS’ monetary policy tightening are still working through economy and should dampen inflation further
• Pace of expansion in the domestic-oriented sectors should moderate as higher consumer prices and interest rates restrain spending
• Says excluding the effects of the GST increase, core inflation is projected to average 2.5–3.5%, and headline inflation 4.5–5.5% for 2023
• Singapore’s GDP growth is projected to be below trend this year
• Says mas core inflation is projected to reach around 2.5% y-o-y by the end of 2023
• With intensifying risks to global growth, domestic economic slowdown could be deeper than anticipated this year
• Singapore’s GDP growth is projected to moderate significantly this year, in line with the global goods and investment cycle downturn
• Mas says when the impact of the GST increase is excluded, core inflation would be even lower, and closer to the historical average in 2023
• MAS’ five successive monetary policy tightening moves since Oct 2021 have tempered momentum of price increases

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For background, this from the previous meeting, in October 2022, Singapore's central bank Central bank A central bank is a financial institution that manages a country's monetary policy, and that often also includes issuing and/or monitoring the currency and regulating the money supply. Central banks also typically act as a lender of last resort to banks in times of financial crisis, and may also supervise and regulate banks and other financial institutions. Examples of central banks include the Federal Reserve in the United States, the European Central Bank, and the Bank of Japan.The chief task A central bank is a financial institution that manages a country's monetary policy, and that often also includes issuing and/or monitoring the currency and regulating the money supply. Central banks also typically act as a lender of last resort to banks in times of financial crisis, and may also supervise and regulate banks and other financial institutions. Examples of central banks include the Federal Reserve in the United States, the European Central Bank, and the Bank of Japan.The chief task Read this Term (the Monetary Authority of Singapore) tightened policy.

• for the 4th time in 2022
• for the fifth time since they began to tighten in October 2021
• responding to rising inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term
• MAS re-centred the currency band to prevailing levels
• but kept the slope and the width of the band unchanged

More on that decision is here:

• Singapore central bank will re-centre the mid-point of S$NEER band up to prevailing level

In the policy statement at the time (October 14 2022) the MAS noted:

• Over the last three months, the S$NEER has broadly appreciated and is now close to the top of the policy band.
• The three-month S$ Singapore Interbank Offered Rate (SIBOR) rose to 3.4% from 2.5% in July, while the Singapore Overnight Rate Average (SORA) increased to 3.4% from 2.1%.

Note that one of the MAS's key tools is its exchange rate policy. It manages the SGD exchange rate against a basket of currencies of Singapore's major trading partners. MAS adjusts the policy band as necessary to maintain price stability and support economic growth.