Singapore Delivers Back-to-Back Tightening to Tame Price Risks

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Or sign-in if you have an account.mgm)jlso(qlciydr056oz([a_media_dl_1.png Bloomberg(Bloomberg) — Singapore’s central bank tightened policy further on Monday, bracing for expected inflationary pressures as renewed tensions in the Middle East threaten to keep energy prices elevated.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountThe Monetary Authority of Singapore, which uses the exchange rate as its main tool rather than interest rates, raised the rate of appreciation of its policy band “very slightly,” it said. It left the width and center unchanged. Four out of 18 analysts in a Bloomberg survey had expected the move, while one called for a re-centering. The remaining 13 predicted no change to monetary policy settings. Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try again“In an environment of continued heightened uncertainty, this calibrated adjustment to the policy stance builds on the tightening in April,” the central bank said in a statement, adding that it “stands ready to curb excessive volatility” in its policy band.The Singapore dollar was up 0.15% to 1.2886 versus the greenback following the announcement. The local dollar has been the top-performing currency in Southeast Asia against the US dollar since the outbreak of the war in the Middle East.Policymakers have been weighing the impact of the US-Iran conflict on the trade-reliant city-state, including inflation-fueling higher oil prices and the risks of a global economic slowdown.While core inflation has been relatively tame, coming in at 1.6% last month, the central bank said it will likely pick up from July and remain elevated. It kept its forecast for core inflation at 1.5%-2.5% for this year. Price risks will likely moderate discernibly from around mid-2027, it said. “External price pressures are expected to persist and pass through more broadly to domestic consumer prices in the period ahead,” MAS said.The boost from the artificial intelligence boom should continue to drive Singapore’s economic growth. It expanded 5.7% last quarter, putting it on track to beat the government’s latest full-year projection of 2%-4%.“The economy’s positive output gap is now forecast to widen slightly in 2026, reflecting the above-trend growth outturns in the first half of the year, as well as the expectation that overall GDP will be sustained at high levels in the near term,” MAS said.Meanwhile, global trade uncertainty is rising again as President Donald Trump rebuilds his tariff wall. The city-state was hit with a 12.5% duty on Friday, although key electronic and pharmaceutical shipments to the US are currently exempted. Other major Southeast Asian central banks have adopted a wait-and-see approach. Indonesia and Malaysia left their rates unchanged this month despite policymakers sounding the alarm regarding renewed tensions in the Middle East, possibility of global inflation accelerating and the US Federal Reserve hiking its key rate sooner.While most central banks use interest rates, Singapore maintains medium-term price stability by managing its currency against a trade-weighted basket — known as the S$NEER — within an undisclosed target band.(Updates with MAS comment in fourth paragraph, market reaction in fifth paragraph.)This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.