No policy tightening as core inflation expects to ease by end-2023

The central bank evaluated that the current policy band is sufficiently tight.

Whilst Singapore’s economic growth is seen to slow down, the Monetary Authority of Singapore (MAS) said it decided to maintain the prevailing rate of appreciation of the S$NEER policy band. 

“There will be no change to its width and the level at which it is centred. This policy stance will continue to reduce imported inflation and help curb domestic cost pressures,” said the central bank.

The current appreciating path of the monetary policy band is sufficiently tight and enough for securing medium-term price stability, MAS said.

“MAS will remain vigilant over developments in the economy and financial markets, amid heightened uncertainty on both inflation and growth,” Singapore’s central bank added.

Looking ahead

The Lion City’s economic growth is expected to be below trend due to global intensifying macroeconomic risks, MAS said.

Even if the inflation continues to rise, MAS said its five successive monetary policy tightening moves since October 2021 have kept the price hikes at bay.

“The effects of MAS’ monetary policy tightening are still working through the economy and should dampen inflation further,” said MAS.

MAS Core inflation is seen to still be high in the next few months but should progressively ease in the second half of 2023 and end the year significantly lower.