SINGAPORE: Mr Ravi Menon, the outgoing head of the Monetary Authority of Singapore (MAS), the country’s central bank, acknowledged that inflation has gone down, but added that it’s too soon to discuss reversing monetary policies.

Mr Menon told CNA that MAS is “not declaring victory” quite yet against the high inflation rates that have affected Singaporeans in the past few years. From 7.5 per cent in September of 2022, headline inflation was at 4.1 per cent in September this year.

Singapore’s core inflation—which does not take into account private transport and accommodation— has also recently dropped to 3 per cent, the lowest it’s been since March 2022.

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MAS also said last week that inflation is projected to ease even further, estimating it between 2.5 per cent and 3 per cent year-on-year by December, adding, “Excluding the impact of the increase in the GST rate in January, core inflation is forecast at 1.5 to 2.5 per cent.”

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However, Mr Menon called 3 per cent inflation “not good enough” in an interview with CNA, as core inflation usually averages at about 2 per cent.

“Core inflation is in a much better place than in the last two years but we’re not home yet. So, I think it would be premature to talk about relaxation or easing in monetary policy,” Mr Menon, who will have his last day as MAS chief after 12 years on Dec 31, 2023, is quoted as saying. He added, “It’s too early to ease because once you ease and if inflation surges up again, you’ve got to redo all that hard work. Central banks are right to be conservative on this and to wait.”

Bloomberg also quotes the MAS chief as saying that the country’s monetary policy “remains appropriately tight” adding that even as countries in Southeast Asia have turned hawkish, Singapore is not under pressure to do more.

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While there have been surprise rate hikes in the Philippines and Indonesia this month in the face of inflationary pressures, Singapore is unlikely to follow suit. Mr Menon described MAS’ current aim to Bloomberg Television’s Haslinda Amin as “not accomplished yet, but it’s on track”.

The MAS chief also sounded an optimistic note about the economy at present, saying, “At least now, we can imagine a pathway to lower inflation without necessarily having a recession.” Authorities are more sure of this than they were last year./TISG

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