The Monetary Authority of Singapore (MAS) explained that it will be maintaining its policy of allowing a gradual and modest appreciation of the Singapore Dollar.
They said that they will not be changing anything about their exchange rate policies so that the Singapore dollar can continue to appreciate gradually for at least the next year.
Giving further details about their policy, MAS explained that it is an appropriate policy which can help to manage inflation. They said it will help keep inflation expectations “well anchored”.
Separately, MAS also lowered its inflation outlook for 2014 with headline inflation likely to be 1% to 1.5%. Previously, it had forecasted that inflation would likely by 1.5% to 2%.
Next year, headline inflation is likely to be even lower, according to the MAS, at about 0.5% to 1.5%.
The areas contributing to low inflation include relatively lower car prices and decreasing housing rentals.
Core inflation, which is the calculation of inflation without taking into account the cost of accommodation or private road transport, MAS said that it will probably be about 2% to 2.5% in 2014. This is slightly lower than the earlier forecasts of 2% to 3%.
For 2015, MAS expects core inflation to be 2% to 3%.
Core inflation affects average Singaporeans more as many average Singaporeans do not own a car and have already bought a HDB flat.