Singapore’s central bank leaves policy unchanged in first quarterly meeting of 2024

Singapore’s central bank left its policy unchanged on Monday in its first quarterly monetary policy decision of 2024, as expected.

The Monetary Authority of Singapore said it will also maintain its exchange rate policy band known as the Singapore dollar nominal effective exchange rate or S$NEER.

“MAS will closely monitor global and domestic economic developments, and remain vigilant to risks to inflation and growth,” the central bank said in a policy statement.

Unlike other central banks that tweak their domestic lending rates, MAS opts to tweak the exchange rates of its currency. The central bank strengthens or weakens its currency against those of its main trading partners, thus effectively setting the S$NEER. The exact exchange rate is not set, rather the S$NEER can move within the set policy band, the precise levels of which are not disclosed.

Beginning this year, MAS shifted from a twice a year review of its monetary policy to a quarterly issue of statements. It noted that it will releasing statements in January, April, July, and October.

The central bank also said it expects the country’s gross domestic product to improve in 2024, estimating growth between 1% and 3%. Preliminary data in early January showed Singapore’s economy grew 1.2% last year, but clocked an increase of 2.8% on a year-on-year basis in the fourth quarter, its fastest pace for the year.

“Barring any further global shocks, the Singapore economy is expected to strengthen in 2024, with growth becoming more broad-based. MAS Core Inflation is likely to remain elevated in the earlier part of the year, but should decline gradually and step down by Q4, before falling further next year,” the MAS said.

The MAS said core inflation is expected to rise in the current quarter “due in part to the one-off impact of the 1%-point hike in…