MONETARY POLICY TO BE ANNOUNCED QUARTERLY NEXT YEAR
MAS also announced that it is shifting to a quarterly monetary policy statement schedule from 2024.
Statements will be released in January, April, July, and October.
Currently, it does so on a half-yearly basis, with statements typically expected in April and October.
The change is part of MAS’ “continuing efforts to enhance monetary policy communications”, adding that it “continues to uphold a medium-term orientation in its policy formulation to secure low and stable inflation”.
The next monetary policy is set for late January 2024.
Economists said the shift is likely spurred by a need to remain nimble to an increasingly uncertain world, as can be seen by the MAS’ recent cycle of five consecutive tightening moves which included two off-cycle decisions in January and July 2022.
“The post-pandemic macroeconomic environment is highly uncertain, as it has become more difficult to distinguish between cyclical economic developments and fading disruptions from the pandemic,” said Mr Shivaan Tandon, an economist covering emerging Asia at research firm Capital Economics.
Geopolitical tensions have also been taken up a notch recently with the Israel-Hamas conflict, which has potential implications for the energy market, said OCBC’s chief economist and head of treasury research and strategy Selena Ling.
The MAS may also see the need to review its policy frequently in response to more volatile currency swings and frequent changes in other central banks’ policy rates, Maybank economists Chua Hak Bin and Brian Lee said.
“While frequent policy reviews are not necessarily better per se, having more frequent policy reviews would facilitate greater market understanding of their economic assessment and policy trajectory guidance, in addition to having more policy flexibility,” said Ms Ling.
Mr Tandon noted that weak economic growth, a cooling labour market and fading disruption from the COVID-19 pandemic should help to put downward pressure on inflation moving forward.
With that, the MAS is likely to adopt a “wait-and-see” approach at its next meeting and keep monetary policy settings unchanged.
“But with inflation set to move much closer to target and the economy likely to weaken, the MAS is likely to loosen policy at its April meeting,” said Mr Tandon.
