The Monetary Authority of Singapore (MAS) yesterday tightened monetary policy for the first time in three years, the latest country to act against inflation as COVID-19-hit economies reopen amid continuing supply chain bottlenecks.
The world’s central bankers are walking a fine line between supporting economic recovery with easy financial conditions while preventing a long-term increase in prices.
The move by Singapore’s central bank came as the economy grew 6.5 percent year-on-year in the third quarter, according to preliminary estimates, extending the nation’s recovery from its worst-ever recession last year due to the pandemic.
Photo: AFP
The MAS sees growth “likely to remain above trend in the quarters ahead,” it said in a statement.
Singapore has taken a strategy of living with the virus by ramping up its vaccination rate — currently at about 85 percent — as it opens up its economy and eases travel restrictions for people who have been vaccinated.
Central banks globally are becoming worried that inflation could become more persistent than originally expected, and are beginning to ease stimulus measures.
The US Federal Reserve is set to slow its asset-purchase program, while Singapore joins Brazil, Mexico, New Zealand, Norway and South Korea in tightening policies.
“MAS’ move is in response to concerns that inflation globally may stay elevated for longer than what may be currently perceived,” CIMB Private Banking regional economist Song Seng Wun (宋城煥) said.
“For Singapore, which imports everything from food on the table to shoes, it is inevitable that a stronger exchange rate is needed to contain inflation as much as possible,” Song said.
This is all the more crucial as the economy is expected to continue growing into next year with further opening up and as travel gains pace, he said.
The MAS forecast that core inflation, which strips out costs of private transport and accommodation, this year will be at the upper end of its 0 to 1 percent estimate, then average 1 to 2 percent next year.
All-item inflation this year should be about 2 percent, compared with earlier expectations of 1 to 2 percent, and average 1.5 to 2.5 percent next year, it said.
Quickening inflation “in the quarters ahead” rests on imported cost pressures from a strengthening recovery in global demand and on supply constraints that have sent commodity prices soaring worldwide, the MAS said.
Singapore conducts monetary policy through the exchange rate in which the Singaporean dollar is managed against the currencies of its major trading partners.
The MAS said that it would “raise slightly” the slope of the Singapore dollar’s exchange policy band from 0 percent, which would allow for a modest appreciation of the unit.
This “will ensure price stability over the medium term while recognizing the risks to the economic recovery,” it said.
The Singaporean dollar rose 0.3 percent after the announcement, its strongest gain against the US dollar since Sept. 23.
Additional reporting by Bloomberg
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last