Singapore sticks to neutral monetary policy as GDP contracts

SINGAPORE (April 13):Singapore’s central bank left monetary policy unchanged after the economy contracted in the first quarter, saying the neutral stance is appropriate for an extended period of time.

All except one of the 21 economists surveyed by Bloomberg predicted the decision. The Monetary Authority of Singapore, which uses the exchange rate as its main policy tool, shifted to a zero appreciation stance for the currency in April last year.

Trade-reliant Singapore lost some of its momentum in the first quarter, contracting an annualized 1.9% from the previous three months, preliminary data from the government showed. While the economy is benefiting from a pick-up in exports, domestic-focused industries such as retail and construction remain weak, giving the central bank room to keep its policy neutral.

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