MAS says next Singapore monetary policy decision will be at scheduled April review

MAS is widely expected to tighten again by strengthening the Singapore dollar against currencies of its trading partners. PHOTO: ST FILE

SINGAPORE - Singapore's central bank will issue its next monetary policy statement in April as scheduled, when it will review its 2022 forecast for core inflation, Mr Edward Robinson, deputy managing director of economic policy at the Monetary Authority of Singapore (MAS), said on Thursday (Feb 17).

He said this after MAS in January made its first out-of-cycle move since 2015, tightening its policy settings to counter rising inflation. MAS is widely expected to tighten again by strengthening the Singapore dollar against currencies of its trading partners on a trade-weighted basis.

"It is scheduled for the normal cycle in April," said Mr Robinson, referring to the next monetary policy statement.

He added that, in April, MAS "will take into account all factors pertinent to the inflation dynamics and growth outlook and formulate monetary policy with the objective of maintaining price stability.

"Let me confirm that the 2022 core inflation remains at 2 per cent to 3 per cent and headline inflation at 2.5 per cent to 3.5 per cent as we have in our forecast made in January."

Mr Robinson said those forecasts are predicated on inflation rising at a measured pace past the midpoint of the year before starting to moderate in the third quarter.

However, he added that import prices could remain firm for longer because of the supply constraints and elevated energy prices, while consumer inflation may accelerate as business costs and wages strengthen along with the pick up in broader domestic demand.

"There is still continuing uncertainty as to the profile of core inflation for the rest of the year and we will need to watch developments quite closely," Mr Robinson said.

MAS' move in January was only the second time the central bank had acted between its biannual monetary policy statements set for April and October since 2003. The last time MAS made an off-cycle move was in January 2015, when it reduced the slope of its policy band.

"We are carefully monitoring a range of labour market and price indicators and we will conduct a thorough assessment of the appropriate setting of policy at the next review scheduled for mid-April," Mr Robinson said.

Ms Yun Liu, a Hong Kong-based economist at HSBC, said that given the ongoing strength in the Singapore economy and persistent inflationary pressure, the next policy move is for the MAS to further strengthen the trade-weighted Singapore dollar in April.

The Government on Thursday maintained its economic growth forecast for 2022 at 3 per cent to 5 per cent. Additionally, it said that the economy grew more strongly in 2021 and contracted less in 2020 than earlier estimated.

“Of course, the bright growth prospects also beg the question of price pressures. Indeed, higher core inflation has started to kick in from late 2021, partly reflecting energy prices. Meanwhile, the labour market has also recovered quickly, with wage growth running above historical average,” Ms Liu noted.

She expects the MAS to further tighten monetary policy in October as well. 

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