Alvin Tan on MAS’ monetary policy
The appreciation of the Singapore dollar last year reflected the outcome of the Monetary Authority of Singapore’s (MAS) tighter monetary policy to dampen inflation. This policy has been successful in curbing imported inflationary pressures. Between May 2022 and June 2023, Singapore's import price index fell by some 14 per cent, which in turn contributed to lower domestic inflation. MAS Board Member Alvin Tan said this in Parliament on Wednesday (Aug 2) in response to a Member’s question on the benefits of a stronger Sing dollar in view of financial losses recorded by MAS last year. Mr Tan said MAS’ policy is focused purely on keeping inflation low and ensuring medium-term price stability. It does not take into account any potential impact on MAS’ profits as this would undermine its mission. He noted that this is similar to how other major central banks conduct monetary policy - many of which have also reported losses arising from this. Mr Tan also explained why MAS’ reported net loss in the last financial year has no impact on the Net Investment Returns available to the Government and how a “smoothening formula” helps to mitigate the impact of the loss on the Government's budget.
The appreciation of the Singapore dollar last year reflected the outcome of the Monetary Authority of Singapore’s (MAS) tighter monetary policy to dampen inflation. This policy has been successful in curbing imported inflationary pressures. Between May 2022 and June 2023, Singapore's import price index fell by some 14 per cent, which in turn contributed to lower domestic inflation. MAS Board Member Alvin Tan said this in Parliament on Wednesday (Aug 2) in response to a Member’s question on the benefits of a stronger Sing dollar in view of financial losses recorded by MAS last year. Mr Tan said MAS’ policy is focused purely on keeping inflation low and ensuring medium-term price stability. It does not take into account any potential impact on MAS’ profits as this would undermine its mission. He noted that this is similar to how other major central banks conduct monetary policy - many of which have also reported losses arising from this. Mr Tan also explained why MAS’ reported net loss in the last financial year has no impact on the Net Investment Returns available to the Government and how a “smoothening formula” helps to mitigate the impact of the loss on the Government's budget.
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