‘SINGAPORE WILL KEEP INFLATION UNDER CONTROL’
MAS urges policymakers to be proactive when there is pickup in price pressures
SINGAPORE
SINGAPORE’S central bank chief said while inflation is still well below the historical average, policymakers need to be proactive if a stronger economy results in a pickup in price pressures.
Inflation would climb at some point if economic growth continued to strengthen, and under those circumstances, the central bank — like others around the world — needed to be forwardlooking, said Ravi Menon, managing director of the Monetary Authority of Singapore (MAS).
“Our track record shows that we are keenly focused on inflation, keeping inflation under control,” he said.
After easing three times between January 2015 and April last year, MAS — which uses the exchange rate as its main policy tool rather than interest rates — has stuck to a neutral currency stance in the face of subdued inflation pressure.
In the statement after its last policy decision on October 13, the central bank didn’t explicitly reiterate that the stance remains appropriate for an extended period, increasing speculation it would tighten next year by seeking a slight appreciation in the exchange rate.
“The policy stance had been appropriate for an extended period because of the prolonged period of very weak inflation we have seen,” said Menon.
“We are now seeing inflation picking up, but still quite below the normal historical average of about just under two per cent.”
Brian Tan, an economist at Nomura Holdings, said Menon’s comments suggested that while the MAS might be thinking of tightening policy, it wouldn’t rush into it.
Much would depend on the outlook for the jobs market and whether wage growth picked up, he said.
On another development, Menon said Singapore wasn’t planning to regulate cryptocurrencies such as bitcoin, but would remain alert to money laundering and other potential risks stemming from their use.
Bitcoin’s rally and the proliferation of other digital assets is attracting the wary eyes of regulators globally, though many central banks have still refrained from supervising cryptocurrencies themselves. Bloomberg