Singapore’s central bank loosened its monetary policy stance for the first time since April 2016 as inflationary pressures are expected to remain muted and economic growth below potential due to the ongoing downturn in the global electronics cycle as well as the pullback in investment spending, partly from the uncertainty in U.S.-China trade relations.
The Monetary Authority of Singapore (MAS), which targets the value of the Singapore dollar against a basket of currencies to control inflation, said it would “reduce slightly the rate of appreciation theS$NEER policy band” but retain the width of the policy band and the level at which it is centered.
The economy of trade-based Singapore has slowed sharply in the last five quarters due to the drag on growth from the manufacturing sector while the services and construction sectors have expanded.
Singapore’s gross domestic product grew by annual 0.1 percent in the third and second quarters of this year and MAS said there were “nascent signs” the global downturn could spill into domestic demand in some of Singapore’s major trading partners despite more accommodative policy.
Get our Weekly Commitment of Traders Report: - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.
Get Our Free Metatrader 4 Indicators - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter
MAS expects Singapore’s economy to pick up modestly in 2020 but output is still expected to remain below potential, keeping inflation muted.
GDP is expected to growth around the midpoint of the zero to 1.0 percent range this year.
Core inflation has been decelerating since December last year and was steady at 0.8 percent t in July and August. In the quarters ahead, MAS expects external sources of inflation to remain benign amid weak demand and well-supplied food and oil markets.