The Monetary Authority of Singapore (MAS) has made no change to its monetary policy, maintaining its current stance of a "modest and gradual appreciation" in the Singapore dollar.
It also said it expects overall inflation this year to come in at the upper half of the forecast range of 2 to 3 per cent.
In its latest policy review released on Monday morning, the central bank said this stance is "assessed to be appropriate, taking into account the balance of risks between external demand uncertainties and rising domestic inflationary pressures".
It expects the Singapore economy to expand for the rest of this year and into 2014, "although some volatility in growth rates is likely".
Noting that inflation has stayed low in recent months, the MAS added that the pace of price rises has "picked up in the latest readings and may continue to rise in the next few quartesr", as businesses pass on higher costs to consumer prices.
"While global demand conditions will strengthen, spare production capacity in the advanced economies and ample supply buffers in commodity markets should keep a lid on imported inflation," the central bank said.
"However, the pass-through of domestic costs to prices of consumer services could intensify, given the rising cost pressures firms are facing from business rentals, COE premiums for commercial vehicles, and labour costs."