Money & Banking

Singapore eases monetary policy for first time in 3 years

Reuters SINGAPORE | Updated on October 14, 2019 Published on October 14, 2019

The logo of the Monetary Authority of Singapore.   -  REUTERS

Singapore economy grew less than expected in the third quarter but avoided slipping into a technical recession.

Singapore's central bank eased monetary policy for the first time in three years on Monday, as widely expected, with the city-state's bellwether economy narrowly dodging recession.

Singapore - which is due to hold an election within months - has like other trade-reliant Asian economies been hit hard by the escalating US-China trade war and a broader global slowdown.

The Monetary Authority of Singapore (MAS) manages policy through exchange rate settings, rather than through interest rates as other central banks do, letting the Singapore dollar rise or fall against the currencies of its main trading partners within an undisclosed policy band.

MAS said it would “reduce slightly” the slope of the Singapore dollar's policy band, using wording that suggested a shallower easing than some had expected. The width and level at which the band was centred was unchanged. The Singapore dollar rose slightly against the US dollar on the day.

“It's a slight reduction in the rate of appreciation. They did not say the policy was neutral so it suggests that the slope is still positive,” said Barclays economist Brian Tan. Eleven economists polled by Reuters had all expected Singapore to ease - its first such move since April 2016.

Singapore's economy grew less than expected in the third quarter but avoided slipping into a technical recession, flash data showed on Monday. MAS increased the slope of the policy band twice last year in efforts to control rising price pressures and strengthen its currency, in its first such tightening moves in six years.

But a prolonged tariff dispute between the United States and China - two of Singapore's biggest export markets - has disrupted global supply chains in many trade-reliant economies, including the city state. Manufacturing has been hit particularly hard, buffeted by the trade tensions and a cyclical downturn in the electronics sector.

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Published on October 14, 2019
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