MAS' double-tap policy easing still an exercise in restraint

Fiscal policy will have to pull its weight amid recession as monetary policy is blunt instrument, say analysts

Annabeth Leow

Published Mon, Mar 30, 2020 · 09:50 PM

Singapore economy

Singapore

SINGAPORE'S central bank brought out the big guns on Monday.

It eased its exchange rate-based monetary policy in a one-two punch, amid the economic devastation of the deadly Covid-19 pandemic.

Both the slope and mid-point of the Singdollar nominal effective exchange rate policy band (S$NEER) were tweaked by the Monetary Authority of Singapore (MAS), setting the Singapore dollar on a weaker path. The width of the band did not change.

"The shift of the S$NEER policy band to the lower level signifies an easing of the policy and better liquidity environment for banks and businesses," Prakash Sakpal, ING's Asia economist, told The Business Times.

Still, analysts noted that the MAS has held back on unleashing its full firepower. The restraint, which is expected to extend to the MAS' October meeting, suggests that fiscal policy will have to pull its weight a…