In a statement released on Monday, MAS confirmed that it will maintain the prevailing rate of appreciation of the Singapore dollar nominal effective exchange rate policy band. The decision was made based on the assessment that the current monetary policy settings are still suitable.
By sustaining the upward trend of the policy band, MAS aims to mitigate imported inflation and address domestic cost pressures, ultimately ensuring price stability in the medium term.
All 15 economists and analysts surveyed by The Wall Street Journal correctly predicted that MAS would maintain its policy. Consequently, there will be no adjustments made to the width or center level of the policy band. This decision aligns with MAS’s previous policy holds in April and October of last year. Additionally, the central bank has transitioned to quarterly meetings as of this year.
MAS’s monetary policy revolves around Singapore’s exchange rate, which it views as an effective tool in maintaining stability in the country’s small and open economy.
Looking ahead, MAS anticipates further improvements in Singapore’s economy throughout 2024. It projects the country’s gross domestic product to range from 1% to 3%.
Stay informed with the latest updates on Singapore’s monetary policy and economic outlook.
Economic Recovery Expected in Manufacturing and Financial Sectors
Impact of Tax Increases and Inflation Projections
The central bank highlights that core inflation may rise in the current quarter due in part to the one-off effects of the 1-percentage-point increase in the goods and services tax (GST) implemented in January this year, as well as the increase in the carbon tax.
However, when excluding the transitory impact of the GST increase, core inflation is projected to slow down, with an average range of 2.5%-3.5% for 2024 remaining unchanged from the October forecast.
Revised Forecast for CPI-All Items Inflation
Since November, there has been a decline in certificate of entitlement premiums, coupled with a larger supply of COE for this year compared to 2023. As a result, the MAS has revised its forecast for CPI-All items inflation in 2024 to a lower range of 2.5%-3.5%, as opposed to the previous projected range of 3%-4%.
This updated outlook suggests a more favorable inflation environment for the year ahead.