Monetary Authority of Singapore:
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Will maintain the current appreciation rate of the S$NEER policy range
- There will be no change in its width or the level at which it is centered.
- Singapore’s economy expected to strengthen in 2024
- For the whole of 2024, core inflation and all-items CPI inflation are expected to average between 2.5% and 3.5%.
- The slightly negative output gap is expected to narrow further in the second half of 2024
- GDP growth forecast for 2024 will be between 1 and 3%
- MAS core inflation expected to remain high at the start of the year
- for 2024, excluding the impact of GST rate increases, core and headline inflation is expected to be between 1.5 and 2.5%.
- Core MAS inflation is expected to remain on its generally moderate path and decline in the fourth quarter, before falling further in 2025.
- Singapore’s economic outlook expected to improve by 2024
- Current monetary policy settings remain appropriate
- The current rate of appreciation in the policy range is necessary to maintain a moderating effect on imported inflation.
- The current rate of appreciation of the policy band is sufficient to guarantee price stability in the medium term
- Core inflation forecasts are expected to remain high in the coming quarters, before declining more visibly in the fourth quarter of 2024 and 2025.
- Will closely monitor global and domestic economic developments and remain vigilant against risks to inflation and growth.
- In the short term, core inflation will remain around current levels
- Excluding the impact of GST increases, core inflation would have remained unchanged between January and February compared to the fourth quarter of last year.
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SGD update:
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I repeat what I posted earlier:
The MAS’s main monetary policy tool is its exchange rate policy. It adjusts its dollar exchange rate (SGD) instead of changing domestic interest rates like most other economies.
It manages the SGD exchange rate against a basket of currencies of Singapore’s major trading partners.
- sets the trajectory of the policy band of the nominal effective exchange rate of the Singapore dollar (S$NEER)
- this serves to strengthen or weaken the local currency relative to those of its main trading partners
S$NEER is a combined index composed of bilateral exchange rates between Singapore and its major trading partners.
- is an exchange rate weighted by trade
MAS allows S$NEER to move up and down within the policy range (exact levels are not disclosed). If it moves out of this band, the MAS intervenes by buying or selling Singapore dollars.
The policy range has three parameters that the MAS can adjust:
- slope, level and width
- the slope adjustment will influence the rate at which the Singapore dollar strengthens or weakens
- adjusting the level, or midpoint, of the policy range allows for an immediate strengthening or weakening of the S$NEER,
- widening policy range allows for greater S$NEER volatility
- these are the parameters that are examined
The MAS unexpectedly announced in October 2023 that it would move to quarterly meetings to assess monetary settings starting in 2024. It only met twice a year, in April and October (but could, and did, meet from time to time, more often). , if conditions demanded an immediate change in parameters, such as in 2022, when high inflation triggered two off-cycle movements).
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