The unscheduled adjustment by the Monetary Authority of Singapore (MAS), which manages monetary policy through exchange rate settings, puts the city-state on the vanguard of central banks beginning to rein in loose monetary policies that helped stimulate growth amid the pandemic, with the focus now shifting to containing spiraling inflation.
Analysts have described the policy tightening, which slightly raises the “slope” or rate of appreciation of the Singapore dollar policy band to mitigate inflation by allowing the local currency to strengthen against peers, as a pre-emptive move ahead of anticipated interest rate hikes by the US Federal Reserve widely forecasted to begin in March.
“Inflation has been climbing in the US and other parts of the world. By announcing the policy change sooner rather than later, MAS is sending a clear signal to the market that it stands ready to act to bring prices under control,” said Cheryl Chan, senior vice-president for capital markets at digital securities exchange ADDX.
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Nile Bowie is a journalist and correspondent with the Asia Times covering current affairs in Singapore and Malaysia. He can be reached at nilebowie@gmail.com.
