The Monetary Authority of Singapore (MAS) on Monday eased its monetary policy by adopting a zero percent per annum rate of appreciation of the policy band starting at the prevailing level of the Singapore dollar Nominal Effective Exchange Rate (S$NEER).
Meanwhile, the authority left the width of the policy band with no change, according to its monetary policy statement.
MAS said this policy decision affirms the present level of the S$NEER, as well as the width and zero percent appreciation slope of the policy band going forward, thus providing stability to the trade-weighted exchange rate.
It added the stable monetary policy stance also reflects the primary role of fiscal policy in mitigating the economic impact of COVID-19, by complementing Singaporean government's efforts in dealing with the impacts to its economy and people, and by ensuring price stability over the medium term.
MAS also lowered its forecast range for both the inflation of consumer price index for all items and the MAS core inflation, which excludes the costs of accommodation and private road transport, in the year of 2020 to -1 to 0 percent.
It said the COVID-19 pandemic had led to a severe contraction in economic activity both in Singapore and globally, due to the combination of supply chain disruptions, travel restrictions imposed in many countries and a sudden decline in demand.
"The Singapore economy will enter a recession this year, with GDP growth projected at −4 to −1 percent," said the authority. "Consequently, disinflationary pressures are expected to broaden, even as the prices of some imported items are likely to increase as a result of the disruptions in production and transport."
Meanwhile, the authority left the width of the policy band with no change, according to its monetary policy statement.
MAS said this policy decision affirms the present level of the S$NEER, as well as the width and zero percent appreciation slope of the policy band going forward, thus providing stability to the trade-weighted exchange rate.
It added the stable monetary policy stance also reflects the primary role of fiscal policy in mitigating the economic impact of COVID-19, by complementing Singaporean government's efforts in dealing with the impacts to its economy and people, and by ensuring price stability over the medium term.
MAS also lowered its forecast range for both the inflation of consumer price index for all items and the MAS core inflation, which excludes the costs of accommodation and private road transport, in the year of 2020 to -1 to 0 percent.
It said the COVID-19 pandemic had led to a severe contraction in economic activity both in Singapore and globally, due to the combination of supply chain disruptions, travel restrictions imposed in many countries and a sudden decline in demand.
"The Singapore economy will enter a recession this year, with GDP growth projected at −4 to −1 percent," said the authority. "Consequently, disinflationary pressures are expected to broaden, even as the prices of some imported items are likely to increase as a result of the disruptions in production and transport."
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