Research Briefing | Oct 15, 2021

Singapore | Resilient growth prompts an early start to tightening

research briefing image for Resilient growth prompts an early start to tightening

In a surprise move, the Monetary Authority of Singapore today tightened monetary policy by slightly raising the slope of the Singapore Dollar Nominal Effective Exchange Rate (S$NEER) policy band. A faster-than-expected increase in core CPI and robust Q3 GDP outcome likely prompted the policy shift.What you will learn:

  • We now forecast the slope of the policy band will rise another 1% in 2022 and the SGD will appreciate 3% against the USD next year.
  • However, we do not expect the earlier policy tightening will derail the growth recovery and have raised our 2021 growth forecast by 0.2ppts to 6.6%.
  • While we expect the output gap to close slightly later than the MAS estimates, we agree that growth dynamics are improving, especially given the resilience of the services sector despite continuing restrictions.
Back to Resource Hub

Related Services

Post

Why an ageing population doesn’t mean soaring inflation

What’s the future for inflation? Joachim Nagel, the new president of Germany's central bank, believes the rapidly ageing global population will play a key role – ramping up pressure on prices in the medium term. While we agree slowing labour supply will stifle output growth, in his recent discussion Nagel failed to fully consider the demand side of the argument.

Find Out More

Post

Surging global food prices could drive eurozone core inflation higher

Along with energy prices, global food prices have emerged as a key driver of the eurozone's current inflationary surge. Like other advanced economies, eurozone countries tend to be less exposed to global food price fluctuations. But if persistent and combined with strong demand, high food prices could result in a higher pass-through to core inflation.

Find Out More