Singapore's central bank, the Monetary Authority of Singapore (MAS) announced on Thursday that Singapore dollar nominal effective exchange rate (NEER) remains well within its policy band given the subdued economic outlook for growth and inflation.
As global economy picked up, Singapore's growth remains uneven as the recovery has been restricted to trade-related sectors, said MAS.
The turnaround in the global IT cycle is expected to continue benefit the domestic semiconductor and precision engineering industries. The performance in the rest of the manufacturing sector, however, will remain patchy, said MAS.
The modern services cluster including the financial sector and firm demand for ICT services is also expected to expand at a slightly faster pace this year.
"While healthcare and education services will be underpinned by resilient demand, spending on discretionary retail items and other services is expected to be dampened by the still-subdued labor market and weak consumer sentiment," the authority added.
Meanwhile, the authority expects core inflation, which excludes the costs of private road transport and accommodation, to rise in 2017 due to increases in global oil prices as well as the temporary effects of administrative price hikes.
Other domestic sources of inflation remain relatively muted and firms are less likely to pass on higher cost to consumers amid the lackluster economic environment, according to the statement.
Since October 2016, MAS has maintained a neutral policy stance to adopt zero appreciation against the currencies of Singapore's key trading partners.
A neutral policy stance is appropriate for an extended period and should ensure medium-term price stability, said the central bank.
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