Singapore keeps policy stance steady
By Central Bank News
The central bank of Singapore held its policy stance unchanged, saying it’s current level is appropriate in containing inflation and keeping the economy on a sustainable growth path. The Monetary Authority of Singapore (MAS), which targets a “modest and gradual appreciation” of the Singapore dollar against a basket of currencies, said there would be “no change to the slope and width of the policy band, as well as the level at which it is centered.” Singapore’s central bank uses the exchange rate rather than an interest rate to carry out monetary policy, adjusting the pace of appreciation or depreciation against an undisclosed basket of currencies by changing the slope, width and center of the band. In April, the central bank increased the slope of its policy band slightly and MAS said the Singapore dollar had appreciated towards the upper bound of its range over the last six months, reflecting inflows from low interest rates in the United States and Europe. Singapore’s economy has weakened in the last two quarters along with the global economy, with Singapore’s trade ministry saying third quarter seasonally-adjusted Gross Domestic Product fell 1.5 percent from the second quarter. “While there remains considerable uncertainty over the evolving fiscal situation in the US and Eurozone, recent central bank policy initiatives worldwide have reduced the risk of a severe global recession,” MAS said in a statement. But growth in Asia is expected to be moderate and the global IT industry is likely to recover mildly next year, the bank said, forecasting that Singapore’s GDP would expand by 1.5-2.5 percent in 2012. In 2013 growth is likely to be slightly below the economy’s potential rate but output should remain above its underlying potential and employment will remain full, supported by construction. Manufacturing and related industries should regain some traction in 2013. Inflation in Singapore eased to 3.9 percent in August from 4.0 percent in July and MAS said inflation would remain elevated in the fourth quarter and the first quarter of 2013, with 2012 inflation to be slightly over 4.5 percent and then ease to 3.5-4.5 percent in 2013. www.CentralBankNews.info