Fiscal policy remains key as disinflationary pressures rise: MAS

Singapore

DISINFLATIONARY pressures will broaden as the demand shock from the Covid-19 pandemic reverberates, but fiscal policy will play the main role in mitigating the crisis, the Monetary Authority of Singapore (MAS) said in its half-yearly Macroeconomic Review on Tuesday.

For now, economists do not see an off-cycle move happening, and expect MAS to keep exchange rate policy unchanged at the next decision in October. Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye see monetary policy as "a blunt instrument" and less effective in tackling the Covid-19 crisis than fiscal policy.