Quarterly monetary decisions are valuable even if – or precisely when – they bring no change

THIS year, the Monetary Authority of Singapore (MAS) moved to a quarterly schedule for its monetary policy decisions, adding two more scheduled meetings in January and July, on top of its existing meetings in April and October.

The decision might have seemed surprising, given that the central bank has not touched policy settings since October 2022.

Indeed, this January’s decision – as economists expected – saw no change to the policy band for the Singapore dollar nominal effective exchange rate (S$NEER).

Similarly, economists do not expect any action at the second policy meeting this year, with the decision to be announced no later than Apr 12.

Yet flexibility is always useful. What matters is having the freedom to decide whether or not to move, even if the decision is ultimately the latter.

After all, MAS’ last tightening move in October 2022 had been the fifth straight tightening move in as many quarters, with off-cycle moves in July and January that year.

These included both increases to the slope of the S$NEER policy band, and upward re-centrings of the policy band at the prevailing level – or, in the case of the April 2022 decision, both moves at the same time.

An official quarterly schedule would certainly have been helpful during that period.

In any case, this year’s new quarterly schedule might finally see some use in July. That is when MAS may finally begin easing its settings, after inflation has continued to cool for a few more months, some economists believe.

More broadly, a quarterly schedule allows private economists, too, to be more nuanced about their expectations.

In MAS’ last survey of professional forecasters, released in March, some respondents’ expectations for eventual MAS loosening had shifted later by about a quarter or so.

It is, of course, far from the case that MAS reconsiders policy settings only when its scheduled policy meetings roll around – as evidenced by its willingness to make off-cycle decisions.

Rather, the value of more frequent scheduled meetings arguably has less to do with MAS’ own internal decision-making, and more to do with public signalling.

An off-cycle move, by its very nature, tends to cause concern and could even spook markets. Yet the same move, if made as part of an existing quarterly schedule, might be unremarkable.

By giving itself more scheduled options, MAS improves its ability to time monetary policy changes without unduly alarming markets or consumers.

Indeed, when announcing its move to a quarterly schedule, MAS itself framed the change as “part of MAS’ continuing efforts to enhance monetary policy communications”.

A quarterly schedule also means more chances to signal that all is going as planned, precisely by not making changes to policy settings.

Further policy tightening might be read as a sign that inflation is worse than expected, or not keeping to MAS’ planned trajectory for its cooling. Conversely, policy loosening might spark worries that the growth outlook has worsened.

Previously, with only two scheduled decision points each year, there was greater room for worry and speculation between each meeting. More frequent meetings mean more chances to reassure markets that all is going as planned, or signal early if things are taking a turn, one way or another.