Singapore, 15 April 2022 (TDI): There has been a further upward shift in Singapore’s inflation outlook which is visible at both global and domestic levels as per the reports of the Monetary Authority of Singapore (MAS).
Core inflation is estimated to be 2% to 3% this year as compared to the past year of 1% to 2%. Singapore is witnessing high inflation since October last year, amidst recovery global demands and resistant supply-side friction.
Risk of inflation is also based on pandemic-related geopolitical effects including food inflation. Energy prices remain high due to regional supply disruptions.
Steeper rise in the airfare and Covid -19 testing requirements for international travelling have been the reason for inflation. On the other front, unemployment rate has further sharpened inflation since pre-pandemic and wage growth is above the historical average.
Inflation could aggravate 3% by the middle of the year before moderating. MAS urges that economic recovery should extend to the domestic safe management measures and border restrictions are progressively eased.
Thus far, it has been led by the trade-related and modern service sector. Omicron virus which emerged in the end of 2021 could temperaroly hamper the activities. But it is definitely unlikely to derail the ongoing economic recovery.
Monetary Authority of Singapore: An Overview
The Monetary Authority of Singapore (MAS) was established in 1970 by act of government, beginning operations as the country’s Central Bank and financial regulatory authority on 1 January 1971.
The MAS promotes non-inflationary economic growth by conductingt of monetary policy and close macroeconomic surveillance and analysis. MAS uses the exchange rate as the intermediate target of monetary policy in an analogous way.
The MAS vouches and regulates various financial statutes regarding money, banking, insurance, securities, financial development sector, issuance, and matters related to currency.
MAS is governed by a board of directors and chaired by the Singaporean Ministry of Finance. As a government institute, MAS operates and adheres to a strict code of conduct.
It believes and operates on core values to assure the professionalism, transparency, and integrity of the institute. Every financial handling of banking operations and management of finances are watched, and monitored by the Ministry of Finance.
Salient Features of Conduct
According to the mandate of Monetary Authority of Singapore, its role as a Central Bank of the country has to follow certain salient features of conduct. They are listed below;
1- Conducting monetary policy, issuance of currency, and monitoring payment system.
2- To serve as a financial agent and deal its banking with the Singapore government. MAS works and creates facilities for transaction with the financial international market like the World Bank (WB).
3- Surveillance and supervision of financial services to maintain its smooth operation and stability with integrity.
4-Managing Singapore’s foreign reserves and assets along with the insurance industry.
5-Establishing sectors and international financial institutions to develop an international financial epic centre.
Role of MAS
MAS plays a significant role in the regulation and monitoring of the fundamental ways of banking to celebrate its credibility in the hub of international recognition.
MAS policy operates and maintains the trade exchange rate keeping in view to ensure price stability over the medium term to build sustainable growth.
MAS policy framework is managing the Singaporean dollar against the weighted basket of trade, managing currencies, which is termed as Singapore dollar nominal effective exchange rate (S$NEER).
It is the primary tool of intervention operation to target the exchange market. Implementation policy requires the monetary authority to accumelate and expand official foreign reserves, leading to a change in the the monetary authority balance sheet size.
MAS, along with the Ministry of Trade and Industry updates the consumer price development.
Liquidity Facility
MAS operates on dollar accounts to facilitate and reduce interest rate turbulence and ensure the smooth operation of the dollar payment system.
MAS Bill
MAS issues bill to provide high-quality liquid assets for banks in Singapore to maintain their regularity needs.
As a participant in the global [forex (FX)] foreign exchange market, MAS adheres to the principle of the foreign exchange code. It does this to enhance a fair foreign exchange market maintaining high ethical standards.
