The Monetary Authority of Singapore tightened its monetary policy, on Friday, signaling an appreciation in the Singapore dollar going forward.
The central bank decided to increase slightly the slope of the S$NEER policy band, from zero percent previously, with the width of the policy band and the level at which it was centred unchanged.
The policy stance was assessed to be consistent with a modest and gradual appreciation path of the S$NEER policy band that will ensure medium-term price stability.
The MAS applies the exchange rate against a basket of currencies within an undisclosed band as its monetary policy tool. The bank will hold its next monetary policy meeting in October.
Policymakers said they have taken into account the uncertainty in macroeconomic outcomes of ongoing trade tensions before adjusting the policy stance.
“An escalation of the US-China trade dispute remains possible, and if it occurs, will have significant consequences for global trade,” the bank noted.
Elsewhere, data published by the Ministry of Trade and Industry showed that economic growth improved to 4.3 percent in the first quarter from 3.6 percent in the fourth quarter.
On a quarter-on-quarter seasonally-adjusted annualized basis, the economy expanded 1.4 percent, a moderation from the 2.1 percent growth in the fourth quarter.
The central bank expects growth to continue at a broadly steady pace in quarters ahead. According to MAS, GDP growth in 2018 should come in slightly above the middle of the forecast range of 1.5-3.5 percent.
Overall, consumer price inflation is forecast to increase in the quarters ahead, and is projected to be in the upper half of the 0-1 percent forecast range for 2018 as a whole.
At the same time, core inflation is seen within the upper half of the 1-2 percent forecast range this year.
With growth likely to slow in the coming quarters and inflation unlikely to become a concern, Krystal Tan, an economist at Capital Economics, said further tightening is unlikely on the cards.