Singapore central bank tightens policy amid solid growth

Singapore’s central bank tightened monetary policy on Friday, changing its stance for the first time in two years amid solid economic growth prospects for 2018.

The Monetary Authority of Singapore, which uses the exchange rate as its main policy tool, increased the slope of the currency band slightly from zero per cent, it said in a statement on its website. The majority of economists in a Bloomberg survey predicted a steeper slope, signalling the MAS would seek an appreciation in the Singapore dollar.

“The Singapore economy has evolved as envisaged since the October 2017 policy review, and should continue on a steady expansion path in 2018,” the MAS said. “However, an escalation of the US-China trade dispute remains possible, and if it occurs, will have significant consequences for global trade.”

In a separate report on Friday, the trade ministry said preliminary data showed gross domestic product grew 4.3 per cent in the first quarter from a year ago, in line with the median estimate in a Bloomberg survey.

The Bloomberg survey on the MAS decision showed economists were more divided than at any time in three years, underlining the difficulty policymakers had in weighing the latest tension between the US and China – Singapore’s two top trading partners – against positive developments in the domestic economy.