The Singapore government has cut its 2014 CPI-All Items inflationforecast to average 1.5-2.5 percent amid lower car prices and housingcosts expected for the second half of the year.
Chairman of the Monetary Authority of Singapore (MAS) TharmanShanmugaratnam, who is also Deputy Prime Minister and Minister ofFinance, announced the cut in his message in the annual report 2013/2014published by MAS on July 24.
However, withdomestic cost pressures remaining the primary source of inflation, thegovernment reiterated that core inflation (which strips outaccommodation and private road transport costs) will remain firm at 2-3percent in 2014 and during this period of economic restructuring.
“The MAS will remain vigilant inensuring that cost pressures are contained in the medium term,” he said,adding “Our monetary policy stance has been consistent with that aim”.
While almost all analysts expect MAS to keepits “modest and gradual” Singapore dollar NEER (nominal effectiveexchange rate) appreciation stance, some economists predicted “small”possibility in changing the monetary policy at MAS next meeting inOctober.
“The Business Times” daily quoted Dr.Chua Hak Bin from Bank of America Merill Lynch's (BAML) as saying thatslowing GDP growth may prompt a shift in view. GDP growth expandedjust 2.1 percent in Q2, as restructuring hurt both manufacturing andservices.
“In our view, there is now a smallprobability of MAS shifting gears to a neutral bias, if the downturnintensifies and core inflation slips below 2 percent,” he said.
The MAS Chairman’s message added that with the gradual improvement inthe global economic environment, Singapore economy will see a growth of2-4 percent, compared to 3.9 percent in 2013 and 2.5 percent in 2012.-VNA
Chairman of the Monetary Authority of Singapore (MAS) TharmanShanmugaratnam, who is also Deputy Prime Minister and Minister ofFinance, announced the cut in his message in the annual report 2013/2014published by MAS on July 24.
However, withdomestic cost pressures remaining the primary source of inflation, thegovernment reiterated that core inflation (which strips outaccommodation and private road transport costs) will remain firm at 2-3percent in 2014 and during this period of economic restructuring.
“The MAS will remain vigilant inensuring that cost pressures are contained in the medium term,” he said,adding “Our monetary policy stance has been consistent with that aim”.
While almost all analysts expect MAS to keepits “modest and gradual” Singapore dollar NEER (nominal effectiveexchange rate) appreciation stance, some economists predicted “small”possibility in changing the monetary policy at MAS next meeting inOctober.
“The Business Times” daily quoted Dr.Chua Hak Bin from Bank of America Merill Lynch's (BAML) as saying thatslowing GDP growth may prompt a shift in view. GDP growth expandedjust 2.1 percent in Q2, as restructuring hurt both manufacturing andservices.
“In our view, there is now a smallprobability of MAS shifting gears to a neutral bias, if the downturnintensifies and core inflation slips below 2 percent,” he said.
The MAS Chairman’s message added that with the gradual improvement inthe global economic environment, Singapore economy will see a growth of2-4 percent, compared to 3.9 percent in 2013 and 2.5 percent in 2012.-VNA
