Singapore's central bank reduces slope of currency band to zero
The Monetary Authority of Singapore adjusts monetary policy for the country through currency control, not via interest rates.
- by reducing the slope to zero the MAS does not want the SGD to appreciate
- a lower SGD is a stimulatory, easing, policy from the MAS.
MAS says it will adopt a zero percent per annum rate of appreciation of the policy band starting at the prevailing level of the SGD NEER
- there will be no change to the width of the policy band.
- Says this policy decision hence affirms the present level of the S$NEER, as well as the width and zero percent appreciation slope of the policy band going forward
- core inflation is likely to remain below its historical average in the near and medium term
- Says MAS' money market operations will at the same time provide sufficient liquidity to the financial system
- will continue to be vigilant over developments in the economy and financial markets, and stands ready to curb excessive volatility in the SGD NEER
- says both MAS core inflation and CPI -all items inflation are expected to average between −1 and 0% in 2020
- says external sources of inflation are likely to weaken in the near term amid the global downturn
- resident unemployment rate is expected to rise and wage growth ease
- Says the SGD has has has depreciated to a level slightly below the mid-point of the policy band
- Singapore economy will enter a recession this year, with GDP growth projected at −4 to −1%.