Singapore's Monetary Authority raises its inflation forecast
On July 14, the Monetary Authority of Singapore said it raised its full-year forecast range for core inflation to 3% to 4%, from 2.5% to 3.5%, and for headline inflation to 5% to 6%, from 4.5% to 5.5%. At the same time, the Singapore dollar policy was tightened and the central axis of the nominal effective exchange rate of the Singapore dollar was raised.
The MAS said it expected inflation to fall in the fourth quarter of this year, but there was considerable uncertainty about the magnitude of the decline in the face of a complex international situation and the pandemic impact. The HKMA also announced that the central axis of the nominal effective exchange rate of the Singapore dollar will be raised to its current level, while the slope and volatility range will remain unchanged. A spokesman for the HKMA said the policy change, combined with previous tightening actions, should help moderate inflation trends and ensure price stability over the medium term.
The Monetary Authority of Singapore normally issues monetary policy statements in April and October each year. But the Monetary Authority of Singapore has tightened policy four times since October.
Singapore imports the vast majority of its energy, raw materials and food, so unlike most central banks that manage monetary policy through interest rates, MAS uses the exchange rate as its main policy tool.