Singapore’s central bank tightens policy in surprise move as economy grows 6.5% in third quarter

A bicycle owner rides on Esplanade bridge as buildings stand in the Central Business District in Singapore on Monday, July 6, 2020.

Wei Leng Tay | Bloomberg | Getty Images

SINGAPORE — Singapore’s central bank tightened financial policy in a surprise move on Thursday as the economy grew 6.5% in the third quarter in contrast with a 12 months in the past.

The Monetary Authority of Singapore — the nation’s central bank — stated in its twice-yearly financial policy assertion that it raised barely the slope of its foreign money band, the Singapore greenback nominal efficient change charge.

That means the Singapore greenback is allowed to understand in opposition to a basket of currencies inside an undisclosed band. The width of the band and the extent at which it’s centered are unchanged, the central bank stated.

Growth in the Singapore economy is prone to stay above development in the quarters forward.

Monetary Authority of Singapore

MAS manages financial policy by means of setting the change charge, moderately than rates of interest. It adjusts the band by means of three levers: the slope, the mid-point and the width.

The Singapore dollar rose round 0.2% to a three-week excessive of 1.349 per U.S. dollar following the central bank’s move.

Eleven out of 13 economists polled by Reuters had anticipated the Singapore central bank to maintain its policy unchanged.

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MAS stated adjustment to the foreign money band “will guarantee worth stability over the medium time period whereas recognising the dangers to the financial restoration.”

It expects core inflation — which strips out lodging and personal transport — to rise between 1% to 2% subsequent 12 months in the medium time period. Core inflation is MAS’ most well-liked worth gauge.

“Growth in the Singapore economy is prone to stay above development in the quarters forward. Barring a resurgence of the virus globally or a setback in the tempo of financial reopening, output ought to return to round its potential in 2022,” stated the central bank.

“At the identical time, exterior and home value pressures are accumulating, reflecting each normalising demand as effectively as tight provide circumstances,” it added.

Growth barely lacking estimates

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