SINGAPORE, July 14 (Reuters) – Singapore’s central bank tightened monetary policy on Thursday, in an off-cycle move, saying the move would curb inflation as the city-state joins other economies battling growing price pressure.

The Singaporean currency jumped broadly on the news and last rose nearly 0.7% to S$1.3963 to the dollar, with economists expecting further tightening in October.

The tightening was the Monetary Authority of Singapore’s fourth in the past nine months and follows Canada’s surprise interest rate hike of 100 basis points on Wednesday and just before an off-cycle hike of 75 basis points in the Philippines on Thursday. Read more

“Obviously, MAS is very concerned about inflation. He’s just going to try to do whatever he can to curb inflation,” said Chua Hak Bin, an economist at Maybank.

The US Federal Reserve is also expected to step up its monetary tightening campaign with an oversized 100 basis point rate hike this month after a dismal inflation report showed inflation hit four-decade highs. . Read more

New Zealand and South Korea both raised rates by half a percentage point on Wednesday. Read more

The MAS said it would refocus the midpoint of the exchange rate policy range known as the nominal effective exchange rate. There will be no change in the slope and width of the strip, he said.

“This policy decision, building on previous tightening measures, should contribute to slowing inflation dynamics and ensuring price stability over the medium term,” the MAS said in a statement.

The central bank also said Singapore’s gross domestic product growth is expected to be in the lower half of the 3-5% forecast range for 2022, while core inflation is now forecast between 3.0. and 4.0% for the year, up from an earlier forecast. 2.5 to 3.5%.

Preliminary data on Thursday showed Singapore’s GDP grew 4.8% in the second quarter, missing forecasts. Read more

Singapore’s core inflation rate – the central bank’s favorite price measure – rose in May at its fastest pace in more than a decade, to 3.6%, just above forecasts , driven by higher inflation for food and utilities. Read more

The city-state has eased most of its local and travel restrictions related to COVID-19 since early April this year, supporting the economic recovery of the Asian financial and commercial hub.

MORE TIGHTENING FORWARD?

In April, Singapore’s central bank tightened monetary policy to slow inflation momentum in the face of soaring prices aggravated by the war in Ukraine and global supply difficulties.

The central bank holds two scheduled monetary policy meetings a year, in April and October.

The latest move is the second off-cycle shift this year, following an unanticipated tightening in January and leaves the door open for further rate hikes, economists say.

“That tells you that we are concerned about inflation and therefore welcome a strong currency,” said Moh Siong Sim, strategist at Bank of Singapore.

“It probably wasn’t quite planned in terms of the timing and scale of the move. That leaves open the question of how much tightening is still to come?”

The MAS manages monetary policy through the setting of exchange rates rather than interest rates, as trade flows overshadow its economy.

It adjusts its policy via three levers: the slope, the midpoint and the width of the policy band, which allow the Singapore dollar to rise or fall against the currencies of its major trading partners in an undisclosed band.

“With forecasts pointing to even higher inflation going forward, we believe it is likely that we will see further action from the MAS at the October meeting,” ING economists said in a report.

Reporting by Anshuman Daga; Additional reporting by Chen Lin, Rae Wee and Tom Westbrook; Editing by Ed Davies and Sam Holmes

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