Oct 14, 2015 (LBO) – The Monetary Authority of Singapore will ease its policy stance for the second time this year and slow the appreciation of the Singapore dollar, it said on Wednesday.
Singapore’s monetary authority targets the exchange rate, based on the NEER (Nominal Effective Exchange Rate), rather than key interest rates to determine monetary policy.
“The Singapore economy is projected to expand at a modest pace in 2015 and 2016, with growth slightly weaker than earlier envisaged,” the monetary authority said, referring to 2 to 2.5 percent growth seen in 2015.
“The manufacturing sector continued to decline, reflecting persistent weakness in the electronics, precision engineering, and transport engineering clusters,” it said.
Core Inflation was projected to average 0.5–1.5 percent in 2016, compared to around 0.5 percent in 2015.
“MAS will therefore continue with the policy of a modest and gradual appreciation of the S$NEER policy band. However, the rate of appreciation will be reduced slightly. There will be no change to the width of the policy band and the level at which it is centred,” a statement said.
The economy, dependent on external trade, contracted 2.5 percent in the second quarter and Prime Minister Lee Hsien Loong is seeking new avenues for growth through a 10-year restructuring plan that includes reducing reliance on foreign labor and more investment in research and development.
The MAS statement can be viewed here