MAS tightens monetary policy in off cycle move

SINGAPORE - Singapore's central bank tightened its monetary policy on Thursday (July 14), in an off cycle move, saying the action will slow the inflation momentum as the city state ramps up its battle against soaring consumer prices.

The Monetary Authority of Singapore (MAS) said it would re-centre the mid-point of the exchange rate policy band known as the Nominal Effective Exchange Rate, or S$NEER. There will be no change to the slope and width of the band, it said.

"This policy move, building on previous tightening moves, should help slow the momentum of inflation and ensure medium-term price stability."

The Singapore dollar strengthened on the move.

In April, Singapore's central bank tightened its monetary policy to slow inflation momentum against soaring prices made worse by the Ukraine war and global supply snags.

The MAS manages monetary policy through exchange rate settings, rather than interest rates, because trade flows dwarf its economy, letting the Singapore dollar rise or fall against the currencies of its main trading partners within an undisclosed band.

It adjusts its policy via three levers: the slope, mid-point and width of the policy band.

The policy move came after the central bank said Singapore's gross domestic product growth rate is expected to come in at the lower half of the 3-5 per cent forecast range for 2022, while core inflation is now projected between 3.0–4.0 per cent for the year, up from an earlier forecast of 2.5–3.5 per cent.