MAS tightens monetary policy in off-cycle move over inflationary risks


The outlook for Singapore’s inflation has shifted to the upside since October last year on the back of a recovery in global demand and “continued supply-side tensions”.

“Upside risks to inflation remain from the impact of pandemic-related and geopolitical shocks on global supply chains,” MAS said.

Energy prices have continued to rise, while imported food inflation remains high due to regional supply disruptions, MAS added.

The agency found that core inflation rose from October to December last year.

Core inflation rose 1.5 percent in October – the highest level for almost three years – and to 1.6 percent in November.

Data released on Monday showed that core inflation rose to 2.1 percent in December, driven by a pick-up in services inflation, mainly due to steeper air fare inflation.

“Airfare CPI has also risen sharply, mainly reflecting the cost of COVID-19 testing requirements for international travel,” MAS said, referring to the consumer price index.

The domestic labor market has tightened, with the resident unemployment rate now near pre-pandemic levels and wage growth above historical averages, MAS said.

“Against this backdrop, price increases for a wide range of goods and services have been stronger than forecast,” the agency said.

It forecast that core inflation could pick up and hit 3 percent by mid-year before easing.


Singapore’s gross domestic product (GDP) growth forecast for 2022 remained unchanged at 3 to 5 percent, “barring any new disruptions,” MAS said.

It found that the economy was growing 2.6 percent on a quarterly basis in Q4 2021, stronger than in the previous quarter, according to forecasts released earlier this month.

“The economic recovery, so far led by the trade-related and modern service sectors, should spread to the domestically-oriented and travel-related sectors later this year as domestic security management measures and border restrictions are gradually eased,” MAS said.

The global economic outlook remains “largely intact”.

“The Omicron variant that emerged in late 2021 could temporarily dampen certain clusters of activity, but is unlikely to derail the broader ongoing economic recovery,” MAS said.

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