Singapore’s central bank defied expectations that it would tighten monetary policy for a sixth time since October 2021, announcing on Friday (April 14) that it would keep its policy settings unchanged despite stubborn price pressures at a 14-year-high and amid advance estimates that first-quarter economic growth fell well short of expectations.
The bellwether city-state had been among the first countries to tighten in response to rising inflation, though the latest move suggests the Monetary Authority of Singapore (MAS) has grown more concerned about the darkening global growth outlook in the wake of recent turbulence that has shaken American and European banking sectors.
“Concerns of a growth slowdown seem to be outweighing inflation, despite elevated core inflation in recent months,” said senior economists Chua Hak Bin and Lee Ju Ye of Maybank Investment Banking Group. In a research note reviewed by Asia Times, the pair wrote they had expected a “final re-centering of the [policy] band up to its prevailing level given sticky and elevated core inflation.”
The MAS uses exchange rates, managed against a trade-weighted undisclosed basket of currencies from Singapore’s major trading partners, instead of interest rates as its primary policy tool to manage imported inflation. Pre-announcement polling from Reuters and Bloomberg had put analysts expecting no change to monetary policy at all in the clear minority.
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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.
