2021-10-14-牛津经济研究院-Singapore_Resilient_growth_prompts_an_early_start_to_tightening_3页_154kb

The Monetary Authority of Singapore (MAS) unexpectedly tightened monetary policy on October 14, 2021, by increasing the slope of the Singapore Dollar Nominal Effective Exchange Rate (S$NEER) policy band from 0% to 0.5%. This move was prompted by faster-than-expected inflation, as core Consumer Price Index (CPI) rose to a two-year high, and a strong performance in the third quarter GDP, which exceeded forecasts due to resilience in the services sector despite ongoing Covid-19 restrictions.

Key economists, such as Sung Eun Jung, predicted that the policy adjustment would lead to an additional 1% rise in the band's slope in 2022 and a 3% appreciation of the Singapore dollar against the US dollar next year. While the tightening may cause concerns about growth, it is unlikely to derail the recovery, with upward revisions to the 2021 GDP forecast to 6.6% and a still-prudent outlook for 2022 growth at 4%, supported by strong private consumption and the ongoing economic reopening as vaccination rates improve.

The decision reflects the MAS's response to broad-based price pressures and was earlier than expected, indicating a gradual tightening cycle. Core CPI is projected to rise to 1-2% in 2022, amid supply constraints and potential resumption of service fee increases. Overall, the report highlights robust economic dynamics but cautions of a delayed closing of the output gap, estimated by the MAS to return to potential in 2022.

For further details, contact Sung Eun Jung.