A combination of slow global growth, plunging oil prices and poor sentiment resulted in consumer prices falling the most in three decades last year.

The data has once again sparked debate about whether the central bank will shift monetary policy at its April meeting, or even make an unscheduled policy move before that. So far, the central bank seems to be in wait-and-see mode, despite the muted outlook for both growth and inflation.

Inflation for all of last year came in at negative 0.5 per cent - the first full-year negative inflation reading here since 2002, and the lowest in 29 years.

This largely reflects lacklustre global growth, sliding oil prices amid oversupply and weak demand, as well as depressed sentiment over China's slowdown. While there is little doubt the Monetary Authority of Singapore (MAS) is keeping a close eye on these risks, officials are more likely to react to major shocks that will alter Singapore's medium- to longer-term growth prospects.

MAS uses the exchange rate as its main monetary policy tool to strike a balance between inflation from overseas and economic growth. A stronger currency counters inflation by making imports cheaper in Singdollar terms, while a weaker Singdollar boosts growth by making exports cheaper abroad.

One of MAS' key goals is medium-term price stability, so policy shifts are not made solely in response to short-run events. The global economic outlook has been cloudy for some time and growth in China, in particular, has been moderating for years.

Absent a sharp slowdown in Singapore's growth prospects between now and April - or clear signs that a recession looms, such as a spike in retrenchments - the MAS is likely to maintain its exchange-rate policy.

Oil prices, however, remain a key risk. On Monday, the MAS and Trade and Industry Ministry cited "significant uncertainty" over the outlook for global oil prices this year. Further shocks to crude prices, which have already plunged to record low levels, might well force the central bank's hand.