Singapore tightens monetary policy as rising oil prices rekindle inflation risk
Singapore's central bank has unexpectedly tightened monetary policy for the second time to combat potential inflation from rising oil prices. The move involves adjusting the exchange rate policy band rather than changing interest rates.
Why it matters
As a major trade hub, Singapore's monetary policy shifts serve as a bellwether for regional economic stability and inflation management.
Singapore on Monday unexpectedly tightened its monetary policy for a second consecutive time, moving preemptively against a renewed oil price surge even as inflation at home stays subdued.
The Monetary Authority of Singapore said it will increase the rate of appreciation of the Singapore dollar's nominal effective exchange rate policy band "very slightly," with the adjustment smaller than April's. The width of the band and the level at which it is centered were left unchanged.
Economists polled by Reuters last week had forecast the central bank to stand pat on its monetary policy stance.
Unlike most central banks, the MAS conducts its monetary policy by managing the Singapore dollar exchange rate against a trade-weighted basket of currencies within an undisclosed band, rather than setting interest rates.
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