MAS will maintain flexibility to carry out 'off-cycle' policy changes

MAS' twice-yearly policy reviews in April and October will stay even as it maintains the flexibility to conduct "off-cycle" changes. -- PHOTO: ST FILE
MAS' twice-yearly policy reviews in April and October will stay even as it maintains the flexibility to conduct "off-cycle" changes. -- PHOTO: ST FILE

SINGAPORE - The Monetary Authority of Singapore (MAS) said its twice-yearly policy reviews in April and October will stay, even as it maintains the flexibility to conduct "off-cycle" changes.

"This arrangement recognises that the Singapore economy is very open and that significant shocks in the external environment can have a sustained impact on the domestic growth and inflation outlook," the central bank said in a statement on Wednesday.

MAS unexpectedly announced earlier on Wednesday that it will allow the Singdollar to appreciate at a slower pace, ahead of its scheduled policy meeting in April.

It also cut its inflation forecast for 2015 to -0.5 per cent to 0.5 per cent, from the 0.5 per cent to 1.5 per cent it had expected in October, mainly because of falling oil prices.

Its move surprised market watchers who had expected no change in its monetary policy stance and sent the Singapore dollar tumbling.

"In our ongoing assessment of the incoming data over late 2014 to January this year, it was apparent that the inflation forecasts had altered significantly since the October (policy meeting," the MAS' statement said.

The central bank decided after "careful deliberation" that it was appropriate to make a measured adjustment in between scheduled monetary policy reviews.

The statement reiterated that MAS "formulates its monetary policy with a medium term orientation to ensure price stability in the economy".

chiaym@sph.com.sg