Singapore Tightens again, Citing Trade Risk

Image: Nikada/ iStock

Singapore's central bank has tightened monetary policy for the second time this year on Friday, citing trade risks.

The Monetary Authority of Singapore (MAS), which manages policy through changing exchange rate instead of interest rates, said it’d slightly increase the slope of the Singapore dollar's policy band. It kept the width and mid-point of the band unchanged.

Though MAS said global growth has been relatively resilient, it cautioned that it could be dampened by trade tension.

“In 2019, trade frictions between some major economies and the uncertainty they pose could weigh more discernibly on global economic activity,” MAS said in a statement. “Barring a significant setback in global growth, the Singapore economy should expand at a pace close to potential in 2019.”

MAS’s GDP growth estimate is within the upper half of the 2.5%-3.5% forecast range in 2018 and expects it to moderate slightly in 2019.

The central said its measure of core inflation to rise to about 2% in the months ahead but come in within the 1.5%-2% range in 2018.

The 2019 core inflation is estimated to average 1.5%-2.5%, said MAS.

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