SINGAPORE: The country’s economic data may have perked up of late but the Monetary Authority of Singapore (MAS) is unlikely to make its next policy move – widely seen as a tightening – at the biannual review this week, said economists.
That is because the central bank remains wary of subdued inflationary pressures and softness in the local labour market. As such, most economists think the MAS will opt to keep its powder dry for now.
Rather than setting interest rates, the MAS manages the economy through the currency by allowing the exchange rate to float within an unspecified policy band and changes the slope, width and centre of that band when it wants to adjust the pace of appreciation or depreciation of the Sing dollar.
At its previous meeting in April, the central bank, which meets twice a year, said it would maintain a neutral policy stance for an “extended period”.
This comes despite a turnaround in Singapore’s growth numbers this year. Thanks to an improving global economy, the manufacturing sector has outperformed since the final quarter of 2016, benefiting some trade-related sectors and helping to lift overall growth.
However, this will unlikely be enough to nudge the MAS into tweaking its exchange-rate based policy this week, most economists said.
2.9 per cent in the previous quarter, with “another stellar performance” from the manufacturing sector on the cards.
On a quarter-on-quarter, seasonally adjusted annualised basis, the economy could expand 7.3 per cent during the July to September period, accelerating from 2.2 per cent in the second quarter.
While the pick-up in GDP shows that recovery is broadening out, DBS noted that third-quarter figures could be the strongest set of growth data this year.
“Growth could ease a tad in the coming quarters as the economy shifts from a recovery to a normalisation phase. Moreover, it is only logical to expect growth to moderate against the backdrop of a normalisation in global monetary policies," wrote DBS economists, who added that GDP growth is expected to come in at 2.8 per cent this year before softening to 2.5 per cent in 2018.
Read more at http://www.channelnewsasia.com/news...ngapore-economy-but-mas-in-no-rush-to-9296294
That is because the central bank remains wary of subdued inflationary pressures and softness in the local labour market. As such, most economists think the MAS will opt to keep its powder dry for now.
Rather than setting interest rates, the MAS manages the economy through the currency by allowing the exchange rate to float within an unspecified policy band and changes the slope, width and centre of that band when it wants to adjust the pace of appreciation or depreciation of the Sing dollar.
At its previous meeting in April, the central bank, which meets twice a year, said it would maintain a neutral policy stance for an “extended period”.
This comes despite a turnaround in Singapore’s growth numbers this year. Thanks to an improving global economy, the manufacturing sector has outperformed since the final quarter of 2016, benefiting some trade-related sectors and helping to lift overall growth.
However, this will unlikely be enough to nudge the MAS into tweaking its exchange-rate based policy this week, most economists said.
2.9 per cent in the previous quarter, with “another stellar performance” from the manufacturing sector on the cards.
On a quarter-on-quarter, seasonally adjusted annualised basis, the economy could expand 7.3 per cent during the July to September period, accelerating from 2.2 per cent in the second quarter.
While the pick-up in GDP shows that recovery is broadening out, DBS noted that third-quarter figures could be the strongest set of growth data this year.
“Growth could ease a tad in the coming quarters as the economy shifts from a recovery to a normalisation phase. Moreover, it is only logical to expect growth to moderate against the backdrop of a normalisation in global monetary policies," wrote DBS economists, who added that GDP growth is expected to come in at 2.8 per cent this year before softening to 2.5 per cent in 2018.
Read more at http://www.channelnewsasia.com/news...ngapore-economy-but-mas-in-no-rush-to-9296294