MAS Says Not Considering Off-cycle Monetary Policy Review

Published date: .

SINGAPORE: The Monetary Authority of Singapore (MAS) said on Tuesday (Aug 13) that it is “not considering” holding an off-cycle policy meeting, even as growth in the Singapore economy slowed to a decade-low amid an escalating trade conflict.

The comments from its deputy managing director Edward Robinson were made during a press briefing held at the Ministry of Trade and Industry (MTI) for the release of Singapore’s second-quarter growth data.

Official data released on Tuesday morning showed the Singapore economy at near standstill with just 0.1 per cent year-on-year growth during the second quarter, prompting the Government to cut its annual growth projection to between 0 and 1 per cent.

This marks the second straight quarter in which the MTI has downgraded its growth forecasts, and it cautioned of “strong headwinds” for the rest of the year.

READ: Singapore slashes annual GDP forecast to 0-1% amid ‘strong headwinds’

Amid the rapid slowdown in growth, economists have raised their bets of an easing by the Singapore central bank, with some mooting the possibility of an inter-meeting move before the scheduled policy review in October.

Monetary easing will weaken the Singapore dollar and provide some help for plunging exports.

When asked if monetary policy remains appropriate, Mr Robinson said: “MAS’s monetary stance is unchanged … MAS is not considering an off-cycle policy meeting.”

He added: "We will be carefully monitoring developments and will take them into account in our assessment of the inflation and growth outlook for Singapore economy at our next scheduled monetary policy review in the middle of October."

READ: Singapore's exports fall 14.6% in Q2

Instead of setting interest rates, the MAS operates a managed float regime for the Sing dollar, allowing the exchange rate to fluctuate within an unspecified policy band. It changes the slope, width and centre of that band when it wants to adjust the pace of appreciation or depreciation of the local currency.

The last time MAS surprised markets with an inter-meeting move was in January 2015, when it unexpectedly reduced the slope of its monetary policy band ahead of its April scheduled review on the back of a sharp drop in global oil prices.

The Singapore central bank tightened monetary policy twice in 2018, before standing pat in April.