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Singapore Inflation Slows, Increasing Scope For Monetary Easing
Perspective | 28 September 2012
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Singapore’s inflation slowed for a second month in August, increasing the central bank’s scope to ease monetary policy and bolster growth.

The consumer price index rose 3.9 percent from a year earlier, the Department of Statistics said in a statement released on 24 September. The median estimate of 13 economists in a Bloomberg News survey was for a 3.8 percent increase, after a 4 percent pace reported earlier for July. The August core inflation rate was 2.2 percent.

The slower price gains give the Monetary Authority of Singapore more room to ease policy in October as faltering exports prompt economists including Irvin Seah at DBS Group Holdings to flag the risk of a technical recession. The city state trimmed its 2012 growth forecast in August after gross domestic product contracted in the three months through June from the previous quarter.

“With the risk of a technical recession looming, the decline in inflation will no doubt tilt the balance for monetary policy easing,” Seah, a Singapore-based economist at DBS, said before the report. “We expect the MAS to adopt a more gradual pace” of currency appreciation, he said.

Singapore’s central bank uses the exchange rate to manage inflation. It guides the local dollar against a basket of currencies within an undisclosed band, and adjusts the pace of appreciation or depreciation by changing the slope, width and center of the band.

The MAS said in April it would allow faster local dollar gains to damp price pressures.

“Given the generally sluggish economic environment, the pass-through of wages and other business costs to consumer prices will continue at a more moderate pace than that seen earlier this year,” the central bank and trade ministry said on 24 September in a monthly statement on price trends.

Prices rose 0.6 percent in August from July, the 24 September report showed.

DBS Group Hldgs  25.110 +0.11 +0.44%   
Business: [FY18 Total Income] Institutional banking (43.7%), consumer banking/wealth management (42.9%), treasury markets and others (13.4%).

Insight: Apr-19, 1Q19 net profit rose 9% to a record $1.7b.... Read More

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