Singapore’s expected boost in taxes this year is raising pressure on the central bank to tighten monetary policy as the Southeast Asian nation seeks to rein in mounting inflation pressures.
The Monetary Authority of Singapore, which uses exchange rates as its main policy tool, will likely aim to let the local currency appreciate further at its next policy meeting in April, according to 12 analysts’ estimates compiled by Bloomberg. Strengthening the Singapore dollar would blunt the impact of rising costs for imports.
The trade-reliant city-state has already flagged its concern over inflation and the MAS unexpectedly tightened policy in October. A rise in the Goods and Services Tax expected as soon as April is crystallizing expectations that the central bank will act again to help offset the resulting increase in prices.
