Singapore Central Bank Keeps Monetary Policy Unchanged

Singapore's central bank maintained its neutral monetary policy stance despite strong economic growth.

The Monetary Authority of Singapore, on Friday, decided to retain the rate of appreciation of the S$NEER policy band at zero percent. The bank also retained the width of the policy band and the level at which it is centred.

This policy stance was assessed to be appropriate in light of the moderate outlook for growth and inflation, the bank said in a statement.

The MAS applies the exchange rate against a basket of currencies within an undisclosed band as its monetary policy tool. The central bank holds monetary policy meeting twice a year.

Elsewhere, the Ministry of Trade and Industry said the economy grew by annualized 6.3 percent in the third quarter, after expanding 2.4 percent in the second quarter.

The central bank said GDP is likely to expand at a steady but slightly slower pace in 2018 compared to 2017. The city-state economy is projected to grow at the upper half of the 2-3 percent range in 2017.

In 2018, economic growth is expected to remain firm though it could moderate from this year.

Headline inflation is expected to come in at around 0.5 percent this year, and stay in the range of 0-1 percent in 2018.

The bank forecast core inflation, which excludes the costs of private road transport and accommodation, to come in at around 1.5 percent this year and average 1-2 percent next year.

The accompanying statement gives the central bank room to tighten policy if necessary, but given the subdued outlook for inflation this is unlikely to happen any time soon, Gareth Leather and Shilan Shah, economists at Capital Economics, said.