MAS maintained the rate of appreciation of the Singapore dollar nominal effective exchange rate (S$NEER) at zero percent on Thursday, according to its official statement.
“As indicated in the October 2016 MPS, a neutral policy stance is appropriate for an extended period and should ensure medium-term price stability,” MAS said.
The central bank, which has official policy-setting meetings just twice a year, sets its monetary policy by adjusting an undisclosed trading band for the Singapore dollar based on a basket of currencies weighted to reflect trade levels with the city-state.
“Following the October 2016 MPS, the S$NEER has fluctuated around a strengthening trend, appreciating from below the mid-point of the policy band to the upper half of the band. The appreciation from late February 2017 reflected, in part, broad-based U.S. dollar weakness,” MAS said on Thursday.
Thursday’s policy stance was assessed to be appropriate given the subdued outlook for growth and inflation, MAS said.
Core inflation is expected to rise from 0.9 percent in 2016 to average 1–2 percent in 2017 due to increases in global oil prices, as well as the temporary effects of administrative price hikes, MAS noted. Over the medium term, core inflation is expected to average slightly below 2 percent, it added.
