NewSingapore unexpectedly eases monetary policy to head off deflation, slowing growth
The surprise easing, the first since MAS eased policy in October 2011, sent the Singapore dollar skidding to 1.3570 per US dollar, its weakest since August 2010
Singapore’s central bank unexpectedly eased monetary policy ahead of its scheduled review in April, in a move that extends decisive shifts by global policymakers to counter deflationary pressures and slowing growth.
The Monetary Authority of Singapore (MAS) said in a statement that it is reducing the slope of its policy band for the Singapore dollar in response to "a significant shift" lower in domestic inflation since its last review in October, 2014.
The surprise easing, the first since MAS eased policy in October 2011, sent the Singapore dollar skidding to 1.3570 per US dollar, its weakest since August 2010.
"Since the last Monetary Policy Statement in October, developments in the global and domestic inflation environment have led to a significant shift in Singapore’s CPI inflation outlook for 2015," the central bank said in a statement.
The central bank - which targets the exchange rate for policy setting instead of interest rates - said that it would continue to stick with a policy of allowing the Singapore dollar to appreciate modestly and gradually against a basket of currencies.
"While the slope of the band is reduced, MAS maintained the modest appreciation stance, while keeping the centre of the band and width of the band unchanged," said Christopher Wong, a senior FX analyst at Maybank in Singapore.
"This is not a move to neutralise the pace of appreciation. Meaning MAS is still keeping a modest appreciation stance but at a reduced pace."