Singapore Keeps Monetary Policy Unchanged

Singapore central bank kept its monetary policy unchanged on Thursday as policymakers said the neutral stance is appropriate to ensure price stability.

The Monetary Authority of Singapore said it will maintain the rate of appreciation of the S$NEER policy band at zero percent.

The width of the policy band and the level at which it is centred will be unchanged, the bank said. As indicated in the October meeting, policymakers observed that a neutral policy stance is appropriate for an extended period and should ensure medium-term price stability.

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.

MAS core inflation was forecast to rise gradually, largely on account of higher global oil prices. Core inflation is projected to average 1-2 percent this year, while overall consumer price inflation is forecast to rise to 0.5-1.5 percent.

Over the medium term, core inflation is expected to trend towards but average slightly below 2 percent.

The city-state economy should expand by 1-3 percent in 2017, not markedly different from the growth of 2 percent in 2016, the bank said.

Data released earlier in the day showed that annualized seasonally adjusted gross domestic product contracted 1.9 percent sequentially in the first quarter.

However, Krystal Tan, an Asia economist at Capital Economics, said stronger export demand is set to help drive a decent recovery in the economy this year.

The economist said the MAS is unlikely to change its monetary policy stance this year.