Singapore releases Q3 GDP advance estimates, MAS monetary policy

A cyclist rides on Esplanade bridge as buildings stand in the Central Business District in Singapore on Monday, July 6, 2020.

Wei Leng Tay | Bloomberg | Getty Images

SINGAPORE — Singapore’s central bank tightened monetary policy in a surprise move on Thursday as the economy grew 6.5% in the third quarter compared with a year ago.

The Monetary Authority of Singapore — the country’s central bank — said in its twice-yearly monetary policy statement that it raised slightly the slope of its currency band, the Singapore dollar nominal effective exchange rate.

That means the Singapore dollar is allowed to appreciate against a basket of currencies within an undisclosed band. The width of the band and the level at which it is centered are unchanged, the central bank said.

Growth in the Singapore economy is likely to remain above trend in the quarters ahead.

Monetary Authority of Singapore

MAS manages monetary policy through setting the exchange rate, rather than interest rates. It adjusts the band through three levers: the slope, the mid-point and the width.

The Singapore dollar rose around 0.2% to a three-week high of 1.349 per U.S. dollar following the central bank’s move.

Eleven out of 13 economists polled by Reuters had expected the Singapore central bank to keep its policy unchanged.

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MAS said adjustment to the currency band “will ensure price stability over the medium term while recognising the risks to the economic recovery.”

It expects core inflation — which strips out accommodation and private transport — to rise between 1% to 2% next year in the medium term. Core inflation is MAS’ preferred price gauge.

“Growth in the Singapore economy is likely to remain above trend in the quarters ahead. Barring a resurgence of the virus globally or a setback in the pace of economic reopening, output should return to around its potential in 2022,” said the central bank.

“At the same time, external and domestic cost pressures are accumulating, reflecting both normalising demand as well as tight supply conditions,” it added.

Growth slightly missing estimates

Singapore’s economy grew 6.5% in the third quarter of 2021 compared to a year ago, official advance estimates showed on Thursday.

Analysts polled by Reuters had expected the Singapore economy to grow 6.6% year-on-year in the third quarter.

On a quarter-on-quarter seasonally adjusted basis, the economy expanded by 0.8%, Singapore’s Ministry for Trade and Industry said in a statement.

This is breaking news. Please check back for updates.

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