The Monetary Authority of Singapore (MAS) has decided to maintain its current monetary policy stance as inflationary pressures ease in the country. This announcement comes as Singapore continues to grapple with the economic consequences of the ongoing COVID-19 pandemic.
The decision to keep monetary policy unchanged was announced by the MAS after its semi-annual policy meeting. The central bank stated that the current level of the Singapore dollar's nominal effective exchange rate remains appropriate and consistent with its mandate to maintain price stability.
One of the key factors influencing the MAS's decision is the slowing inflation rate in Singapore. Consumer prices in the city-state have moderated in recent months, primarily driven by lower global oil prices and subdued domestic demand. The MAS expects inflation to remain within its forecasted range of 0% to 1% in the coming months.
The outlook for Singapore's economy remains uncertain due to the ongoing pandemic and its impact on global growth. While the country has managed to contain the spread of the virus within its borders, it continues to face challenges in its external-facing sectors, such as tourism and exports. The MAS highlighted the uneven global recovery and potential risks arising from new COVID-19 variants as factors that could affect Singapore's economic trajectory.
The central bank's decision to maintain its current monetary policy stance aims to provide stability and support for businesses and households as they navigate the challenges posed by the pandemic. The MAS stated that its accommodative policy stance remains appropriate, given the cautiously optimistic outlook for economic recovery and the ongoing need for ongoing government support measures.
Singapore's economy contracted by 5.4% in 2020, marking its worst recession since independence. However, signs of recovery have started to emerge, with the country rebounding strongly in the first quarter of 2021 with a year-on-year growth of 1.3%. The MAS expects the economy to grow by 4% to 6% in 2021, supported by a gradual improvement in domestic and global economic conditions.
The central bank's decision to leave its monetary policy unchanged is seen as a prudent move to ensure stability while the country continues its economic recovery. Monetary authorities around the world have adopted similar approaches, opting for accommodative policies to support growth and employment amid the unprecedented challenges posed by the pandemic.
In summary, the MAS's decision to maintain its current monetary policy stance reflects the easing inflationary pressures in Singapore and a cautiously optimistic economic outlook. While uncertainties remain, particularly in light of the ongoing pandemic, the central bank's commitment to stability provides a reliable foundation for businesses and households as they navigate the ongoing challenges.
