SINGAPORE: Singapore’s central bank is expected to tighten monetary policy in April for the first time in six years, with economic growth seen solid enough to shift away from a stance associated with periods of acute weakness.
Twelve of 19 analysts, or 63 percent of respondents in a Reuters survey, predicted the Monetary Authority of Singapore would tighten its exchange-rate based policy at its review, due on April 13 at 8 a.m. (0000 GMT).
The 12 analysts expect the MAS to slightly increase the appreciation rate of the Singapore dollar’s policy band from zero percent — a “neutral” stance that the central bank has kept for the last two years.
The remaining seven analysts expect the MAS to keep policy unchanged.
The results include four additional responses compared to an earlier Reuters poll published on March 27, in which 60 percent of analysts expected a tightening.
The government’s advance estimate of first-quarter gross domestic product, due at the same time, is expected to show that GDP expanded 1.0 percent from the previous three months on an annualised basis, according to the median forecast in a Reuters survey.
On a year-on-year basis, GDP likely grew 4.3 percent, which would be the fastest pace since a near four-year high of 5.5 percent in the third quarter of last year.
The solid growth momentum and signs of improvement in the labour market are seen as outweighing the risks from U.S.-China trade tensions, and putting the MAS on track to tighten policy for the first time since April 2012.
“They don’t want to be behind the curve, given that the recovery has come quite some way, despite the downside risks as we look forward,” said Vishnu Varathan, head of economics and strategy for Mizuho Bank in Singapore.
