SINGAPORE: Singapore's central bank tightened monetary policy for the first time in seven years on Tuesday, citing rising inflationary pressures in the region due to global supply restrictions.
According to reports, the Monetary Authority of Singapore (MAS) said in its latest monetary policy statement that the rate of appreciation of the Singapore dollar Nominal Effective Exchange Rate policy band will be raised slightly, while the width of the policy band and the level at which it is centred will remain unchanged.
This step builds on the preemptive switch to an appreciating posture in October 2021, and it is necessary to ensure medium-term price stability, according to the statement.
The Singapore economy is forecast to grow at a respectable rate of 3 to 5% this year, according to the central bank, and the production gap is expected to narrow modestly.Because of rapidly mounting global and internal cost pressures, the authority predicts that MAS Core Inflation will rise in the short term, reaching 3% by the middle of this year before declining. "While core inflation is likely to decline in the second half of the year as supply constraints ease, the risks remain tilted to the upside," it added.
The central bank announced that its inflation predictions for 2022 are being revised. From 1.0-2.0 percent forecast in October 2021, MAS Core Inflation is now expected to be 2.0-3.0% this year.