(Bloomberg) — Singapore’s central bank kept its monetary settings unchanged in defiance of a global shift to policy easing, saying its current stance is consistent with medium-term price stability.
Most Read from Bloomberg
The Monetary Authority of Singapore, which uses the exchange rate as its main policy tool rather than interest rates, maintained the slope, width, and center of the currency band, it said in a statement on Monday. That will keep the local dollar on an appreciating path to blunt imported price pressures.
“The risks to Singapore’s inflation outlook are more balanced compared to three months ago,” MAS said in a statement. It “assesses that the monetary policy settings are for now still consistent with medium-term price stability.”
The Singapore dollar rose from a session low on the news, trading at 1.3065 against the greenback at 8:01am local time.
The overall “tone is not dovish at all,” said Selena Ling, chief economist at Oversea-Chinese Banking Corp. Ltd. “If anything there is now a concern about unit labor cost growth and hence services growth, albeit the 2% core inflation forecast for 2025 is retained.”
All but three of 13 economists surveyed by Bloomberg had predicted no change to policy at the final review of the year.
Monday’s decision contrasts with interest-rate cuts in most of the developed world with policy makers in Washington and Wellington opting for outsized 50 basis-point reductions at their latest meetings. That reflects cooling inflation elsewhere that’s yet to fully translate to Singapore, which imports many basic goods.
While consumer prices in Singapore have edged lower over 2024, they remain elevated. The central bank’s preferred core inflation gauge – which includes food and fuel prices, and excludes accommodation and private transport — picked up in August to 2.7% and exceeded estimates.
The MAS doesn’t have an explicit inflation target, though it has said that core inflation of just under 2% on average “is consistent” with price stability in the economy.
In Monday’s release, the authority said core inflation momentum “is expected to remain contained” in the fourth quarter and should end the year around 2%.
The MAS’s parameters for the Singapore dollar’s nominal effective exchange rate, or S$NEER, have been unchanged for the past year.
The monetary authority guides the local dollar against a basket of its major trading partners and adjusts the pace of its appreciation or depreciation by changing the slope, width and center of the currency band. It doesn’t disclose details of the basket, the band nor the pace of appreciation or depreciation.
Factors ranging from the oil price to the global policy trajectory and US presidential election have implications for Singapore’s growth and the performance of its currency, economists said.
–With assistance from Catherine Bosley.
(Adds market reaction, comment from economist.)
Most Read from Bloomberg Businessweek
©2024 Bloomberg L.P.