SINGAPORE (April 14): The Monetary Authority of Singapore will ease its monetary policy by not allowing the Singapore dollar to appreciate, it said in its half yearly Monetary Policy Statement on Thursday.

MAS says the Singapore economy is projected to expand at a more modest pace in 2016 than envisaged in the October policy review.

In the quarters ahead, subdued growth in Singapore’s major trading partners will continue to pose cyclical headwinds to the external-oriented sectors.

“MAS Core Inflation should also pick up more gradually over the course of 2016 than previously anticipated, and is now likely to fall below 2% on average over the medium term,” says the regulator on its website.

MAS will “set the rate of appreciation of the S$NEER policy band at zero percent, beginning 14 April 2016. This is not a policy to depreciate the domestic currency, and only removes the modest and gradual appreciation path of the S$NEER policy band that was in place.”

“The width of the policy band and the level at which it is centred will be unchanged.”

The move comes as a surprise as most analysts had expected the central bank to maintain its policy of allowing a modest, gradual appreciation of the Singapore dollar.