MAS pours cold water over speculation fires of a policy easing in October

Inflation is expected to turn positive this year.

Global uncertainty has fanned the flames of a suspected October monetary policy easing by Singapore’s central bank, but the Monetary Authority of Singapore (MAS) is quick to douse speculations by saying that there is no need to change the policy stance.

According to Ravi Menon, managing director of MAS, unless there is a marked deterioration in the global economy or significant shift to the inflation outlook, there is no need to change the monetary policy stance.

“The current stance will help ensure price stability in the medium term,” Ravi Menon said. “Notwithstanding recent volatility in exchange rates, the nominal effective exchange rate of the Singapore dollar remains within the policy band.”

He also stressed that MAS’ exchange rate policy framework is sufficiently flexible to accommodate heightened volatility in international financial markets.

The progressive easing of monetary policy since January last year has been in line with weak underlying inflationary pressures. MAS has taken measured steps to reduce the slope of the nominal effective exchange rate band over the past 18 months. This has been validated by accumulating evidence of weakening inflationary pressures.

“MAS stands ready to curb excessive volatility in the trade-weighted Singapore dollar,” he said.