Monetary Authority of Singapore is Forecast to Tighten Monetary Policy Next Month
According to economists, the escalation of the US-China trade war would force Singapore central bank to tighten monetary policy again in October, as China is Singapore's biggest export market. The central bank tightened policy for the first time in six years in April.
In the poll, conducted between September 24 and September 27, 9 of 15 analysts said their baseline expectation is for the Monetary Authority of Singapore (MAS) to tighten its exchange-rate based policy at its semiannual review, expected in mid-October. The remaining analysts predict the central bank will hold fire mainly due to the trade worries.
The MAS manages monetary policy by making changes to the exchange rate, rather than interest rates, letting the Singapore dollar rise or fall against the currencies of its main trading partners within an undisclosed policy band based on its nominal effective exchange rate (NEER).
Core inflation rate in Singapore currently holds at 1.9%, near the top of the central bank's expected 1%-2% range for 2018. Some analysts said any tightening would be designed to keep price pressures in check.