The Monetary Authority of Singapore (MAS) on Tuesday said it was tightening monetary policies in an out-of-cycle move as inflation earlier exceeded its forecasts.
The central bank manages monetary policy through exchange rate settings, rather than interest rates, letting the local dollar rise or fall against the currencies of its main trading partners within an undisclosed band, according to Reuters.
Policy is adjusted via three levers, the slops, mid-point and width of the policy band which is known as the Nominal Effective Exchange Rate, or S$NEER.
The MAS said it would raise slightly the rate of appreciation of its policy band. The width of the policy band and the level at which it is centered will be unchanged.
Monetary tightening came is a day after inflation data of the country climbed to the fastest in eight years, prompting officials to revise forecasts.
“This move builds on the pre-emptive shift to an appreciating stance in October 2021 and is appropriate for ensuring medium-term price stability,” the MAS said, referring to its tightening move late last year.
“While core inflation is expected to moderate in the second half of the year from the elevated levels in the first half as supply constraints ease, the risks remain skewed to the upside,” the MAS said.
