Singapore eases monetary policy for first time in five years

The Singapore’s Jewel Changi Airport on March 10, 2020. (Photo by JMS)

Singapore, Singapore — Singapore’s central bank eased monetary policy Friday for the first time in almost five years on expectations that inflation and economic growth will slow this year.

The Monetary Authority of Singapore (MAS), which uses exchange rates rather than interest rates to control policy, said it would “reduce slightly the slope” of the dollar trading band, which it said “will ensure medium-term price stability”.

The local dollar is pegged to a basket of currencies of its main trading partners and is allowed to rise or fall within an undisclosed band.

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In a statement, the MAS said there would be no change to the width of the policy band or the level at which it is centered.

The last time the MAS eased monetary policy was in March 2020, when Singapore was headed for a pandemic-sparked recession.

It said it expected core inflation to average 1.0-2.0 percent this year, compared with the 1.5-2.5 percent projected in October.

“Singapore’s imported costs should stay moderate, reflecting forecasts of global oil price declines and favorable supply conditions in key food commodity markets,” it said in the statement.

Singapore’s economy grew a forecast-topping 4.0 percent in 2024, according to advance estimates this month, but it is seen slowing to 1.0-3.0 percent in 2025, the MAS said.

Singapore’s economic performance is often seen as a barometer of the global environment because of its dependence on international trade.