For the first time in six years, Singapore’s monetary policy is tightened. Although, expectations of steady growth in 2018, but warned of risks from global trade tensions.
The previous tightened monetary policy by MAS was in April 2012 after the improvement of the US business sentiment and the end of the risk from eurozone debt crisis.
The Monetary Authority of Singapore (MAS) said it would allow for a slight appreciation in the local dollar, having had a “zero percent” policy previously.The city-state followed similar moves recently by South Korea and Malaysia to tame inflation as global economies get back on track after the financial crisis.
The MAS said it expects the economy to “continue on a steady path” this year but flagged increasing trade tensions as a downside risk for the export-driven economy.
As a small and open economy that imports most of its needs, Singapore uses currency policy rather than interest rates as a tool to tweak the island’s economy. It manages the dollar against an undisclosed basket of currencies of its major trading partners and competitors.