MAS must be vigilant against deflation, says IMF

Another policy easing should not be ruled out.

Singapore’s central bank should be watchful against signs of deflation, the International Monetary Fund (IMF) said.

The city-state has been grappling with its longest stretch of negative inflation on record, with the headline consumer price index (CPI) stuck in the red for the 17th straight month in March.

After a two-week visit, IMF staff noted that the Monetary Authority of Singapore’s (MAS) decision to ease monetary policy since January 2015 was appropriate in light of slowing growth, negligible inflationary pressures and intensifying labour market headwinds.

“Although inflation is on track to reach a stable medium-term level of under two percent by the end of 2017 in the baseline, the MAS should remain vigilant to signs of deflation and adjust its policy settings further if needed,” the IMF said.