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SINGAPORE - SINGAPORE. Singapore's central bank on Monday kept its monetary policy settings unchanged, as expected, in its first review of the year.
The Monetary Authority of Singapore (MAS) said it will maintain the prevailing rate of appreciation of its exchange rate-based policy band known as the Nominal Effective Exchange Rate, or S$NEER.
The width and the level at which the band is centred did not change.
"Barring any further global shocks, the Singapore economy is expected to strengthen in 2024, with growth becoming more broad-based. MAS core inflation is likely to remain elevated in the earlier part of the year, but should decline gradually and step down by Q4, before falling further next year," MAS said in a statement.
Core inflation in December was 3.3% year-on-year, falling from its peak of 5.5% early last year. MAS said core inflation is projected to slow to an average of 2.5–3.5% for 2024.
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Gross domestic product (GDP) was up 2.8% on a yearly basis in the fourth quarter of last year, according to advance estimates published by the trade ministry in early January.
GDP for the full year of 2023 was 1.2%, and the trade ministry projects GDP to grow by 1-3% in 2024.
MAS said both upside and downside risks to the inflation outlook remain.
OCBC economist Selena Ling said that suggests the MAS is on an extended pause for now.
"April monetary policy is likely another hold and the earliest window for an easing could only come later in the year when core inflation eases more convincingly," she said.
As a heavily trade-reliant economy, Singapore uses a unique method of managing monetary policy, tweaking the exchange rate of its dollar against a basket of currencies instead of domestic interest rates like most other countries.
