Singapore Q3 GDP Advance Estimates, MAS Monetary Policy Revealed

On Monday, July 6, 2020, a cyclist climbed the Esplanade Bridge as the building stood in Singapore’s Central Business District.

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SINGAPORE – Singapore’s central bank tightened monetary policy in a surprise move on Thursday as the economy grew 6.5% in the third quarter from a year earlier.

Singapore’s monetary authority – the country’s central bank – said in its bi-annual monetary policy statement that it had slightly raised its currency band, the nominal effective exchange rate of the Singapore dollar.

That means the Singapore dollar is allowed to appreciate against a basket of coins in an invisible band. The width of the band and the level at which it is centralized remain unchanged, the central bank said.

Singapore’s economic growth is likely to remain above trend in the next quarter.

Currency Authority of Singapore

MAS manages monetary policy by setting exchange rates instead of interest rates. It adjusts the band through three levers: opela, midpoint and width.

The Singapore dollar rose nearly 0.2% to a three-week high of 3 1,349 after the central bank’s move.

Eleven of the economists surveyed by Reuters said the central bank would keep its policy unchanged.

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The MAS said the currency band adjustment would “ensure price stability in the medium term while acknowledging the risks of economic recovery.”

It expects core inflation – which shuts down housing and private transport – to rise between 1% and 2% next year in the medium term. Inflation is the preferred price measure of MAS.

“Singapore’s economic growth is likely to remain above trend in the next quarter. With the onset of the global virus or a push to the pace of economic reopening, output in 2022 will return to near its potential,” the central bank said.

“At the same time, external and domestic spending pressures are accumulating, which normalizes demand as well as reflects tight supply conditions,” it added.

Growth estimates are somewhat missing

Singapore’s economy grew 5.5% in the third quarter of 2021 compared to a year earlier, the official forecast showed on Thursday.

In a Reuters poll, analysts expected Singapore’s economy to grow 6.6% year-on-year in the third quarter.

The economy grew 0.8% on a quarter-quarterly seasonal basis, Singapore’s Ministry of Commerce and Industry said in a statement.

This is breaking news. Please look back for updates.

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