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Singapore keeps policy on hold, opens door to 2018 tightening

13 Octobre 2017

Singapore's central bank kept its monetary policy unchanged on Friday, even as third-quarter economic growth exceeded market expectations, saying the economy could moderate next year as the global recovery enters a more mature phase.

The bank forecast the city-state economy to grow at the upper half of the 2-3 percent range in 2017.

The MAS referred to its comments in the October 2016 policy statement that "the neutral policy stance would be appropriate for an extended period", but did not say that the outlook remains same going forward. The bank also retained the width of the policy band and the level at which it is centred.

"This is a bit akin to the European Central Bank where growth has picked up but inflation hasn't picked up to the point where they need to pull the trigger on tightening policy".

"We expect the global electronics cycle to remain strong until the end of this year and then start petering out early next year", NatWest Asia Economist Vaninder Singh said 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".

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Core inflation - a major policy consideration for the MAS - is expected to be broadly stable throughout next year though it could trend upwards to average slightly below 2 per cent over the medium term, MAS said.

Singapore manages monetary policy through exchange rate settings, rather than interest rates, letting the local dollar rise or fall against the currencies of its main trading partners within in an undisclosed policy band.

The Singapore dollar slipped after the MAS policy decision, and was last down 0.1 per cent on the day at 1.3540 per U.S. dollar. The central bank holds monetary policy meeting twice a year.

Core inflation, which excludes the costs of private road transport and accommodation, is projected to come in at about 1.5 percent this year and average 1 percent to 2 percent next year, it said.

Twenty-four of 25 analysts in a Reuters survey predicted the MAS would keep monetary policy unchanged this month, while one analyst expected a tightening.

Singapore keeps policy on hold, opens door to 2018 tightening