A cyclist rides on the Esplanade Bridge as buildings stand in Singapore’s Central Business District on Monday, July 6, 2020.
Wei Leng Tay | Bloomberg | Getty Images
SINGAPORE — Singapore’s central bank surprisingly tightened monetary policy on Thursday as the economy grew 6.5% in the third quarter compared to a year ago.
The Monetary Authority of Singapore – the country’s central bank – said in its biennial statement on monetary policy that it has slightly increased the slope of its currency margin, the Singapore dollar’s nominal effective exchange rate.
That means the Singapore dollar is allowed to rise against a basket of currencies within an undisclosed range. The width of the band and the level at which it is centered are unchanged, the central bank said.
MAS manages monetary policy by fixing the exchange rate rather than the interest rates. It adjusts the tire via three levers: the slope, the center and the width.
The Singapore dollar rose about 0.2% after the central bank’s move to a three-week high of 1.349 per US dollar.
Eleven of the 13 economists surveyed by Reuters had expected Singapore’s central bank to leave its policy unchanged.
MAS said adjusting the currency margin “will ensure price stability over the medium term while recognizing risks to the economic recovery.”
It expects core inflation — which excludes housing and private transportation — to rise 1% to 2% in the medium term next year. Core inflation is MAS’s preferred price gauge.
“Singapore’s economy growth is likely to remain above trend in the coming quarters. Unless the virus resurfaces globally or a slowdown in the pace of economic reopening, production should be around its potential by 2022,” the plant said. Bank.
“At the same time, external and domestic cost pressures are mounting, reflecting both normalizing demand and tight supply conditions,” it added.
Growth somewhat lacking in estimates
Singapore’s economy grew 6.5% in the third quarter of 2021 compared to a year ago, official advances showed on Thursday.
Analysts polled by Reuters had expected Singapore’s economy to grow 6.6% year-on-year in the third quarter.
Seasonally adjusted quarterly, the economy grew 0.8%, the Singapore Ministry of Trade and Industry said in a statement.
This is the latest news. Come back for updates.