MAS rules out off-cycle policy meeting despite GDP outlook downgrade

SINGAPORE’S central bank will not move outside its usual schedule to change its monetary policy, chief economist Edward Robinson confirmed in a briefing early on Tuesday.

Despite the latest downgrade to Singapore’s full-year economic forecast, Mr Robinson - who is also deputy managing director of economic policy at the Monetary Authority of Singapore (MAS) - said that the central bank’s monetary policy stance has not changed since its last decision.

“MAS is not considering an off-cycle policy meeting,” Mr Robinson told reporters.

“We will be carefully monitoring developments and will take them into account in our assessment of the inflation and growth outlook for the Singapore economy at our next scheduled monetary policy review in the middle of October.”

In its April meeting, the MAS had affirmed core inflation of between 1 per cent and 2 per cent and stood pat on the “modest and gradual appreciation path” of the Singapore dollar in April.

But it more lately adjusted its expectations for the labour market, on the back of newfound softness on the manpower front, as private economists observed last month.

“The central bank subtly softened its language on labour market conditions - suggesting they have ‘held up’, compared to ‘remained firm’,” HSBC economist Liu Yun wrote on July 23.

“We have previously noted that a deterioration in the labour market would reinforce upcoming policy stimulus on both the monetary and fiscal fronts.”

Now, Terence Ho, divisional director of manpower policy and planning at the Ministry of Manpower, has reiterated the view from a labour market advance release from late July.

The overall unemployment rate was steady at 2.2 per cent, as at end-June, against the previous quarter; but unemployment for Singapore residents rose from 3 per cent to 3.1 per cent.

Meanwhile, net job growth slowed to 3,300 additions, compared with 13,400 in the first quarter.

“At this point, based on the preliminary data for Q2, as we know, total employment continued to grow but at a slower pace compared to the previous quarter in the year before. And there’s been a creeping-up of unemployment rates for residents and citizens,” said Mr Ho on Tuesday.

“In the meantime, retrenchments fell, so that’s just that companies are not really laying off so many workers - but, rather, exercising more caution in hiring.

“But, going forward, given the headwinds mentioned on the economic front, we do expect some upward pressure on unemployment rates and also retrenchments.

“So we’re monitoring the situation very closely.”

When asked for more details on the expected impact on jobs, Mr Ho said: “I can’t give a sort of very precise forecast on how these rates will increase, but I think a lot will depend on the economic situation.”