MAS stands pat with neutral monetary policy stance

Accenture is using the Accenture Liquid Studio in Singapore a research lab that focuses on emerging technology experimentation and rapid application development to develop and test interbank payment models using three blockchain platforms. — Reuters

Accenture is using the Accenture Liquid Studio in Singapore a research lab that focuses on emerging technology experimentation and rapid application development to develop and test interbank payment models using three blockchain platforms. — Reuters

Singapore's central bank kept its monetary policy unchanged on Friday, even as third-quarter economic growth exceeded market expectations, saying the economy could moderate next year as the global recovery enters a more mature phase.

Third-quarter growth was underpinned by the strong expansion in electronics production, reflecting an enduring upturn in global demand for IT products, MAS said in its policy statement.

The Monetary Authority of Singapore said it will maintain the rate of appreciation of the S$NEER policy band at zero percent.

According to the advance estimates released by the Ministry of Trade and Industry, the Singapore economy grew by 6.3 percent on a quarter-on-quarter seasonally-adjusted annualised basis in the third-quarter, following the 2.4 percent recorded in the second-quarter. "Given the economic outlook at this stage and consistent with medium-term price stability, MAS will maintain the rate of appreciation of the (Singapore dollar nominal effective exchange rate) policy band at zero per cent", the central bank said in its semiannual monetary policy statement.

Economists this month focused on the central bank's use of the term "extended period" to describe the need for a neutral policy stance and what that might mean for policy going forward.

Headline inflation is expected to come in at around 0.5 percent this year, and stay in the range of 0-1 percent in 2018.

The Singapore dollar slipped after the MAS policy decision, and was last down 0.2 percent on the day at 1.3543 per US dollar.

"They don't think they have to follow the Federal Reserve tit-for-tat", said Selena Ling, head of research and strategy for OCBC Bank, referring to the US central bank's policy tightening bias.

The MAS said the Singapore economy has performed "slightly better than envisaged" since its policy meeting in April, while inflation has kept well within expectations. "The window is open for 2018", Ling added.

Twenty-four of 25 analysts in a Reuters survey predicted the MAS would keep monetary policy unchanged this month, given the lack of strong inflationary pressures, while one analyst expected a tightening.