MAS keeps monetary policy unchanged for third time in a row

SINGAPORE: The Monetary Authority of Singapore (MAS) kept its exchange rate-based monetary policy unchanged on Monday (Jan 29), standing pat for the third consecutive meeting and in line with market expectations.

In its monetary policy statement, the Singapore central bank said it will “maintain the prevailing rate of appreciation” of its Singapore dollar nominal effective exchange rate (S$NEER) policy band.

There are no changes to the width of the policy band and the level at which it is centred.

All 13 analysts polled by Reuters had expected MAS to hold off making changes to its policy in this scheduled review.

Monetary policy had been left unchanged at the two policy reviews in 2023, with the last adjustment – a re-centering of the mid-point of its policy band – in October 2022.

Unlike most central banks that manage monetary policy through the interest rate, MAS manages monetary policy by letting the local dollar rise or fall against the currencies of its main trading partners within an undisclosed band, known as the S$NEER.

It adjusts its policy by changing the slope, mid-point and width of the policy band.


Laying out its outlook ahead, MAS noted that prospects for the Singapore economy should continue to improve in the year ahead, with gross domestic product (GDP) growth projected to come in between 1 and 3 per cent.

A turnaround in the global electronics cycle and anticipated easing in global interest rates should help to support a recovery in the manufacturing and financial sectors, as growth in the domestic-oriented sectors normalise further towards pre-pandemic rates.

“Barring any further global shocks, the Singapore economy is expected to strengthen in 2024, with growth becoming more broad-based,” it wrote in its policy review statement.

Turning to inflation, the central bank expects core inflation, which excludes the costs of accommodation and private transport, to likely remain elevated in the earlier part of the year.

For the first quarter, a rise in consumer prices is to be expected partly due to a “one-off” impact from the 1-percentage-point increase in the Goods and Services Tax (GST), as well as the hike in carbon tax.

In the second quarter, water prices will go up – by 20 cents per cubic metre from Apr 1 – as part of a phased increase to cope with higher production costs.

Elsewhere, inflation for certain services components, including public transport and healthcare, could also “stay elevated as less frequently-adjusted prices rise to catch up with higher cost levels”, MAS said.

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