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MAS tightens policy again, cautions about trade risks

[SINGAPORE] The Monetary Authority of Singapore (MAS) on Friday tightened monetary policy for the second time this year, saying the country's economy is likely to expand steadily barring a setback to global growth from trade frictions between the United States and China.

MAS, which manages policy through exchange rate settings rather than interest rates, said it would slightly increase the slope of the Singapore dollar's policy band. It kept the width and mid-point of the band unchanged.

Eleven of 20 analysts in a Reuters survey predicted the MAS would tighten policy via a slight increase to the slope of the policy band.

In its semi-annual policy statement, the MAS said global growth has been 'relatively resilient' so far, but cautioned about the risks from trade frictions.

"In 2019, trade frictions between some major economies and the uncertainty they pose could weigh more discernibly on global economic activity," it said.

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"Barring a significant setback in global growth, the Singapore economy should expand at a pace close to potential in 2019."

MAS said GDP growth should come within the upper half of the 2.5–3.5 per cent forecast range in 2018 and moderate slightly in 2019.

The central bank expects its measure of core inflation to edge up to around 2 per cent in the months ahead, but come in within its 1.5-2 per cent range this year. For 2019, it expects core inflation to average 1.5–2.5 per cent.


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