By Xinghui Kok
SINGAPORE (Reuters) -Singapore’s central bank on Friday kept monetary settings unchanged as inflation in the city-state moderated and economic growth beat expectations.
In a move that surprised economists, the Monetary Authority of Singapore (MAS) said it would shift to a quarterly schedule of policy statements in 2024 from semi-annual.
The MAS maintained the prevailing rate of appreciation of its currency policy band known as the Singapore dollar nominal effective exchange rate, or S$NEER. There was no change to the width and the level at which the policy band is centred.
“Against the external outlook, prospects for the Singapore economy are muted in the near term but should improve gradually in H2 2024,” MAS said in a statement.
As part of the increased frequency of its policy statements, monetary policy will be reviewed in January, April, July and October instead of just April and October.
Maybank economist Chua Hak Bin said the more frequent reviews were a positive and welcomed move for markets and analysts as they improve the communication and transparency of policy.
“It may be a reaction to the more volatile currency swings and frequent changes in other central banks policy rates,” said Chua.
OCBC economist Selena Ling said the increased frequency was a reflection of how the global economic and geopolitical landscape is evolving.
“The semi-annual frequency had been debated in the past, especially during crises, on whether it allows sufficient flexibility to pivot,” Ling said.
Prior to April, the MAS tightened monetary policy five times in a row, including in two off-cycle moves last year.
Gross domestic product (GDP) rose 0.7% in the July to September period on a yearly basis, according to advance estimates published by the trade ministry on Friday. Economists polled by Reuters had expected growth of 0.4%.
Inflation has cooled from a 14-year high of 5.5% in January and February to 3.4% in August.
As a heavily trade-reliant economy, Singapore uses a unique method of managing monetary policy, tweaking the exchange rate of its dollar against a basket of currencies instead of the domestic interest rates used in most other countries.
Singapore in August narrowed its 2023 GDP growth forecast to 0.5% to 1.5% from 0.5% to 2.5% previously.
The financial hub avoided a technical recession with the economy expanding 0.1% quarter-on-quarter in April to June following a 0.4% contraction in the first quarter of 2023.
(Reporting by Xinghui Kok, Editing by Kanupriya Kapoor, Martin Petty and Sam Holmes)