Singapore’s Central Bank Eases Currency Policy

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An honorable member of the Coffee Shop Has Just Posted the Following:

http://www.wsj.com/articles/singapor...icy-1422407842

Singapore’s central bank Wednesday announced a surprise easing of its currency policy, as falling global oil prices have subdued inflationary expectations.

In an announcement before its scheduled policy meeting in April, the Monetary Authority of Singapore said it would slow the Singapore dollar’s appreciation against a basket of currencies. (Update: Singapore Pulls Trigger in Deflation Fight)


The central bank uses its currency as its policy tool to dampen inflationary expectations and support growth as the country’s trade flows dwarf its domestic activity. To do this, the Singapore dollar operates under a managed float currency regime based on a basket of currencies of the city-state’s major trade partners, and is allowed to trade within an undisclosed band.

The MAS said that it will reduce the slope of the Singapore dollar’s trading band, while keeping the width and the level of the center of the band unchanged.

MARKET TALK

ING Says Singapore Easing Highlights Difficulty of Labor Tightening

The Monetary Authority of Singapore’s surprise easing highlights the difficulties of tightening the local labor market while improving productivity, ING Bank says. Since 2013 the MAS has cited cost pressure from the tight labor market as the main inflation threat. Today’s statement says the pass-through to consumer prices has to date been slightly weaker than anticipated, ING notes. ([email protected])

Market Talk is a stream of real-time news and market analysis that is available on Dow Jones Newswires

“Since the last monetary policy statement in October, developments in the global and domestic inflation environment have led to a significant shift in Singapore’s CPI (consumer price index) inflation outlook for 2015. As part of its ongoing economic surveillance, MAS has assessed that it is appropriate to adjust the prevailing monetary policy stance,” the central bank said.

The central bank now expects inflation of between -0.5% to 0.5% this year, compared with its earlier estimate of 0.5-1.5% announced in October. The economy is expected to grow at a moderate pace of 2%-4% in 2015.

The Singapore dollar collapsed 1.4% to a new 4.5-year low of S$1.3570 versus the U.S. dollar in the wake of the announcement.


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