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Singapore tightens monetary policy, warns on trade tensions

AFP  |  Singapore 

tightened its today on expectations of steady growth in 2018, but warned of risks from global trade tensions.

The city-state followed similar moves recently by and to tame inflation as global economies get back on track after the financial crisis.

The Monetary Authority of (MAS) said it would allow for a slight appreciation in the local dollar, having had a "zero per cent" policy previously.

As a small and open economy that imports most of its needs, uses currency policy rather than interest rates as a tool to tweak the island's economy. It manages the dollar against an undisclosed basket of currencies of its major trading partners and competitors.

The MAS said it expects the economy to "continue on a steady path" this year but flagged increasing trade tensions as a downside risk for the export-driven economy.

"An escalation of the US-dispute remains possible, and if it occurs, will have significant consequences for global trade," it said in a statement, referring to threats of tit-for-tat tariffs by the world's top two economies.

"Barring a setback in global trade, growth in the economy should continue at a broadly steady pace in the quarters ahead."

In a separate statement, the trade ministry said that based on advance estimates the economy grew 4.3 per cent on-year in the first three months of 2018, up from 3.6 per cent in October-December.

The MAS said growth this year should come in slightly above the middle of the 1.5-3.5 per cent forecast range. The economy expanded 3.6 per cent last year.

"The measured adjustment to the policy stance takes into account the uncertainty in macroeconomic outcomes presented by ongoing trade tensions," said in a note.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, April 13 2018. 15:20 IST
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