Singapore inflation hits highest in nearly two years, but undershoots expectations
Consumer prices rose 2.2% last month, compared with the 2.3% expected by economists polled by Reuters
Singapore's inflation rate hit 2.2% in the latest month, its highest in nearly two years, but came in slightly below the 2.3% forecast by economists. This relatively modest reading could influence the Monetary Authority of Singapore's (MAS) future policy decisions, particularly regarding the slope of the exchange rate.
The MAS uses a managed float regime, allowing the Singapore dollar to fluctuate within a band, rather than setting a fixed exchange rate or freely floating the currency. A higher inflation rate could have prompted the MAS to adjust the slope or width of this band, but the undershoot might keep policy on hold for now. Economists will be watching to see if this inflation reading alters the MAS's stance on monetary policy.
Looking ahead, market participants will focus on upcoming economic data, including the MAS's own inflation forecasts and the country's GDP growth numbers. Any significant deviations from expectations could impact the Singapore dollar's performance against major currencies, such as the US dollar and the euro. For now, the currency markets seem to be taking the inflation reading in stride, with the Singapore dollar trading relatively steady.
Originally reported by cnbc.com. CurrencyNews adds analysis for finance & markets readers.