Singapore Central Bank holds monetary policy, cuts inflation forecast
2013-04-12 15:46:57
The Monetary Authority of Singapore, or MAS, on Friday decided to maintain its monetary policy unchanged, stating that keeping the Singapore dollar at its current path of modest and gradual appreciation would help tame inflation pressures and lead the economy to sustainable growth.
Separately, initial estimates released by the Ministry of Trade and Industry showed that Singapore's economy contracted at a faster-than-expected rate in the the first quarter as the extended weakness of external demand hit manufacturing activity.
The central bank said it retained its policy of a modest and gradual appreciation of the Singapore Dollar Nominal Effective Exchange Rate, or S$NEER, policy band. The slope and width of the policy band as well as the level at which it is centered will remain unchanged.
"This policy stance is assessed to be appropriate for containing inflationary pressures, anchoring inflation expectations, and facilitating the restructuring of the economy towards sustainable growth," the MAS said in a statement.
In April 2012, MAS had increased the slope of the S$NEER policy band slightly, with no change to the level at which the band was centered.
The central bank said that though the Singapore economy experienced some consolidation in the first quarter it would see a gradual improvement for the rest of the year, helped by a recovery in external demand. The economy is forecast to grow 1-3 percent this year.
The MAS lowered its forecast of headline inflation for 2013 to a range of 3-4 percent from its earlier prediction of 3.5-4.5 percent.
Core Inflation is forecast to be at 1.5-2.5 percent for the whole year, down from 2-3 percent estimated earlier. The downward revision reflects weaker-than-expected price increases over the past few months. Core inflation is seen rising moderately in the latter half of the year, reflecting persistent tightness in the labor market.
Advance estimates released by the Ministry of Trade and Industry today showed that the economy contracted 1.4 percent sequentially in the first quarter following an increase of 3.3 percent in the fourth quarter. On a yearly basis, GDP was down 0.6 percent after rising 1.5 percent in the previous months.