14:39 | 16/04/2018 Global Economy
Singapore has decided to tighten its monetary policy for the first time in six years as part of efforts to cope with risks of global trade tension, local authorities announced on April 13.
|Illustrative Image - Source: thestar.com.my|
The Monetary Authority of Singapore (MAS), or the central bank, said it would slightly increase the slope of the Singapore dollar's policy band from zero percent previously.
The MAS manages monetary policy through exchange rate settings, rather than interest rates, letting the Singapore dollar rise or fall against the currencies of its main trading partners within an undisclosed policy band based on its nominal effective exchange rate.
The bank added that Singapore's economy should continue on a steady expansion path in 2018, but also pointed to potential risks from a US-China trade spat. According to MAS, the escalation of the US-China trade tension will greatly affect the global trade.
The country’s gross domestic product expanded 4.3 percent in the first quarter of 2018 from the same period last year. Meanwhile, the MAS held that the country’s growth in the whole year will be higher than forecast by 1.5-3.5 percent. Last year, Singapore’s economy grew 3.6 percent.
The central bank has kept the appreciation rate of the Singapore dollar's policy band at zero percent since April 2016, describing it as a "neutral" policy stance.