Singapore’s central bank will tighten monetary policy moderately after the country reported strong economic growth in the third quarter.
The Singapore Monetary Authority said it would “slightly raise” the slope of the band it uses to control exchange rates on Thursday.
The country also reported GDP growth of 6.5 percent year over year in the third quarter of 2021. The economy grew 0.8 percent from the previous quarter, rebounding from the 1.4 percent decline reported in July, the Commerce Department and Information said. The growth was in line with analysts’ expectations.
The ministry added that the economy has benefited from strong global demand for semiconductors and electronics from Singapore.
Meanwhile, the country’s central bank said the global economic rebound and domestic rebound after the second-quarter setback would create cost pressures that would push inflation to 1 to 2 percent over the next year.
“In the coming quarters, rising import and wage costs, along with the recovery in the domestic economy, will support a broad-based rise in inflation. Imported inflationary pressures are likely to linger for some time as global demand and ongoing supply constraints persist, ”the bank said in a statement, adding that its recent adjustment“ will ensure price stability over the medium term ”.
Unlike most monetary authorities, which focus on interest rates, Singapore controls prices by keeping the exchange rates between its currency and those of its major trading partners within a certain range, the range of which it does not publicly disclose.
