SINGAPORE'S central bank kick-started regional policy normalisation on Thursday (Oct 14), as it moved to "raise slightly the slope" of the Singapore dollar nominal effective exchange rate (S$NEER) policy band, up from a flat or "zero" slope before.

The decision - which caught many bank economists off guard - is not expected to stave off elevated core inflation in the short run. But it opens the door to more tightening in 2022, and could see the Singdollar (SGD) make stronger gains in the year ahead.

"With this expectation of a continued economy recovery both globally and domestically, the Monetary Authority of Singapore (MAS) likely decided there was flexibility to be pre-emptive to head off an eventual rise in demand-pull inflation pressures," said Barclays analysts Brian Tan and Ashish Agrawal in their report.