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MAS tightens monetary policy in surprise off-cycle move: Why and what it means for you and me


Economists stated the central financial institution’s transfer to permit for a stronger Sing greenback will go in the direction of taming worth will increase for the person on the road, though the influence is not going to be quick.

Noting how the costs for on a regular basis objects have risen and are more likely to go up additional amid persistent international provide chain snarls and the rally in commodity costs, Mr Song stated: “From the MAS’ standpoint, it can not make exterior costs go down however what it can do is to make use of the trade charge to minimise greater import prices.

“It’s about trying to contain as much of the imported inflation as possible by helping the Sing dollar stay firm against our key trading countries. So that instead of a S$10 increase, (consumers get) a smaller price jump of S$9.”

That stated, the results of monetary policy tweaks will take time – from six to 9 months shifting ahead – to materialise.

“This doesn’t mean that your grocery will immediately be 5 to 10 per cent cheaper because everything would have been done in deals or contracts settled months ago,” stated Mr Song.

“It’s for the medium term that we hope to see prices stabilising or increasing at a slower rate.”

A stronger Sing greenback in comparison with the currencies of different nations might also counsel extra beneficial trade charges for travellers heading abroad, the economist added.

“But it’s good and bad news. Those who get to travel may enjoy a stronger Sing dollar but the flip side is that from travel package, insurance to items you buy, has become more expensive given how inflation is moving up across the world. Everything costs more now,” stated Mr Song.


Economists stated additional tightening strikes by the MAS can’t be dominated out, with the central financial institution eyeing inflation tendencies and the financial system’s first-quarter GDP efficiency.

“The MAS has clearly decided on the merits of moving early … However, this front-loaded action does not rule out further tightening at the April meeting,” stated ING’s senior economist Nicholas Mapa.

“The MAS will be closely monitoring inflation trends in the coming months to gauge whether more
aggressive tightening will be warranted,” he added.

OCBC Bank’s head of treasury analysis and technique Selena Ling additionally stated that given how Tuesday’s transfer is just a “slight steepening” of the appreciation path of MAS policy band, one other steepening of the slope in April is “the path of least resistance … if inflation remains broad-based and persistent”. 

“The key determinant would be whether core inflation peaks at the 3 per cent handle and stabilises, or if private consumption remains very buoyant to drive car and accommodation prices higher, and there are more domestic fee adjustments arise down the road, in addition to imported inflation,” added Ms Ling.

2022 will likely be a yr of double tightening for Singapore as each fiscal and monetary policy levers will grind tighter. 

At the upcoming Budget 2022, the extremely anticipated 2 per cent Goods and Services Tax (GST) hike, potential further wealth taxes and a carbon tax hike are more likely to be introduced and how these measures might affect consumption and inflation expectations forward stay unsure.   

All eyes may also fall on what greater inflation will imply for the deliberate enhance in GST.

Prime Minister Lee Hsien Loong has stated that the Government must start moving on the planned GST increase in Budget 2022 on condition that the financial system is rising from the pandemic.

Economists from Moody’s Analytics stated the most recent inflation studying “throws a spanner” into these plans. 

“The GST is widely expected to be raised by 2023 at the latest in order for the Government to balance its budget sheet,” stated Asia-Pacific economists Denise Cheok and Shahana Mukherjee in a report issued after MAS’ policy choice.

“With prices already rising at record speed, the timing of a GST hike will need to be carefully considered.”



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