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MAS expected to tighten monetary policy next month

Singapore's central bank is expected to tighten monetary policy next month for the first time in six years, with economic growth solid and the labour market showing signs of improvement, a Reuters poll of economists found.

Nine of 15 analysts said they expect the Monetary Authority of Singapore (MAS) to tighten its exchange rate-based policy at its semiannual policy decision, expected to be announced in mid-April.

The poll was conducted between March 21 and yesterday.

Nine analysts expect the MAS to tighten policy by slightly increasing the appreciation rate of the Singapore dollar's policy band, which is currently at zero per cent.

"We forecast a continued broadening of growth and gradual reduction in labour market slack, underpinning a moderate rise in core prices. This dynamic should guide policy toward a modest tightening stance next month," Mr Benjamin Shatil, an economist for JPMorgan, said .

The other six analysts predicted that the central bank would keep policy on hold next month.

The central bank has kept the appreciation rate of the Singapore dollar's policy band at zero per cent since April 2016, in what the central bank refers to as a "neutral" policy stance.

If the MAS tightens policy next month, it would mark the central bank's first policy tightening since April 2012.

At its last policy review in October, the MAS changed a reference to maintaining its neutral policy stance for an extended period, a shift that analysts said created room for the central bank to tighten policy in 2018. - REUTERS

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