Friday, April 13, 2012

MAS raises inflation forecast, tightens monetary policy

SINGAPORE: The Monetary Authority of Singapore on Friday raised the forecast for Singapore's inflation rate this year by a full one percentage point to 2.5 to 3.0 per cent.

Prompted by stronger than expected inflationary pressures, MAS says it will be increasing the slope of its policy band slightly for a modest and gradual appreciation of the Singapore dollar.

Most economists had forecast no change in monetary policy.

MAS, which uses the exchange rate as a tool to control inflation, explained that its new policy stance will help anchor inflation expectations, ensure medium term price stability and help keep growth on a sustainable path.

With economic activity turning out somewhat stronger than anticipated in Q1 2012 and "resource markets" tightening further, MAS says core inflationary pressures have persisted.

MAS Core Inflation, which excludes private road transport and accommodation costs, rose from 2.4 per cent in the fourth quarter of 2011 to 3.2 per cent in the first two months of 2012.

CPI All-Items inflation moderated from 5.5 per cent in the fourth quarter of 2011 to 4.7 per cent in January to February.

MAS says inflation rates will remain elevated over the next few months, before easing over the remaining course of this year.

- CNA/wm

View the original article here

Source From Channel News Asia

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