It will continue to seek a 'modest and gradual appreciation' of the Singapore dollar, while the trading band and its slope 'will be increased slightly to accommodate volatility in global financial markets.' -- PHOTO: AFP
THE Monetary Authority of Singapore (MAS) will steepen and widen the band on the local dollar to curb inflation, said the central bank on Thursday.
It will continue to seek a 'modest and gradual appreciation' of the Singapore dollar, while the trading band and its slope 'will be increased slightly to accommodate volatility in global financial markets,' said the MAS in a statement.
The centre of the policy band remains unchanged, the central bank said.
The MAS move follows a slowing of growth in the third quarter, after the Singapore economy expanded at an exceptionally strong pace the first half year.
GDP in the July to September quarter contracted by 19.8 per cent from the previous quarter, on a seasonally adjusted annualised basis, according to the advance estimates released by the Ministry of Trade and Industry on Thursday morning.
'This reflected a sharp pullback in pharmaceutical output and some moderation in the underlying growth momentum in the rest of the economy, particularly in the trade-related industries,' said the MAS statement.
'The downshift in economic growth in the second half of the year was largely expected as the temporary boost from inventory restocking waned and some pharmaceutical plants switched to the production of a different value-mix of active ingredients.'
MAS said the economy grew 15.5 per cent in the first three quarters, from a year ago, and GDP is on track to grow by 13 to 15 per cent this year.
Looking ahead, the central bank said economic activity in the major industrial economies is likely to expand at a slower pace, following a fairly brisk recovery from the recession.
Unemployment remains elevated and credit growth subdued. With fiscal consolidation underway, the pace of transition to private demand-led growth in the G3 economies is expected to be gradual, it noted.
' In Asia, growth will be supported by robust domestic demand and a resilient financial sector. While some slowdown is expected, overall economic conditions in the region should stay firm,' added the MAS.
'Against this backdrop, the level of economic activity in Singapore is projected to remain high across a broad range of industries although growth could further ease in the near term. In 2011, the domestic economy will continue to expand but at a more sustainable rate in line with its growth potential.'
