SINGAPORE — The Monetary Authority of Singapore (MAS) is keeping to its monetary policy and maintaining a zero rate of appreciation, in a move widely expected by economists. 

The central bank, which makes its policy decisions twice a year, said in a statement on Wednesday (Oct 14) that even though the economy is likely to recover next year, the underlying growth momentum will be weak. 

While inflation will slowly rise and turn positive in 2021, it is also expected to remain well below its long-term average, MAS added. 

“As core inflation is expected to stay low, MAS assesses that an accommodative policy stance will remain appropriate for some time. This will complement fiscal policy efforts to mitigate the economic impact of Covid-19 and ensure price stability over the medium term.” 

In its last exchange rate policy announcement in April, MAS took the unprecedented step of making a double move to ease its monetary policy in an effort to stimulate Singapore’s economy, which has been battered by the Covid-19 pandemic. 

It first gentled the slope of the policy band within which the Singapore dollar moves to a zero rate of appreciation, and then lowered the midpoint of the band.

The last time MAS lowered the midpoint of the policy band was during the 2009 global financial crisis. 

MAS manages monetary policy through exchange-rate settings, rather than through interest rates as other central banks do, letting the Singapore dollar rise or fall against the currencies of its main trading partners within an undisclosed policy band, known as the Singapore dollar nominal effective exchange rate or S$NEER. 

The Singdollar is allowed to appreciate or depreciate against this basket of currencies as long as it stays within this band. MAS intervenes where needed to ensure that it does.

In the latest announcement, the midpoint of the policy band and its width remains unchanged.