‘ROOM FOR TIGHTENING NEXT YEAR’
Singapore stands pat on policy, holds cautious view on GDP growth
SINGAPORE’S central bank held monetary policy steady yesterday but changed a reference to maintaining current settings for an extended period, a shift that analysts said created room for a tightening next year.
The Monetary Authority of Singapore (MAS) said it would maintain the rate of appreciation of the Singapore dollar’s policy band at zero per cent, adding that the width and the level at which it is centred will be unchanged.
The central bank said while growth in Singapore’s major trading partners was expected to remain firm next year, it could moderate as the global economic recovery stabilised.
Official data released yesterday showed Singapore’s tradereliant economy grew 6.3 per cent in the third quarter, from the previous three months, on an annualised basis, driven by demand for production of electronics goods and much faster than the median forecast in a Reuters survey of 3.2 per cent.
Analysts said the central bank’s policy statement suggested it held a cautious view about growth next year while also keeping some space for policy adjustment if economic conditions provided a positive surprise.
“We expect the global electronics cycle to remain strong until the end of this year and then start petering out early next year,” said NatWest Asia
Economist Vaninder Singh in a note.
“For this reason, we are leaving our base case view unchanged at this stage for no change from the MAS in April next year as well. Of course, the data in the interim will bear close watching.”
The Singapore dollar slipped after the MAS policy decision, and was last down 0.2 per cent on the day at 1.3543 per US dollar. Reuters