Singapore`s central bank tightened monetary policy for the first time in six years on Friday, saying the city-state`s economy should remain on a steady expansion path in 2018, even as it acknowledged risks from a possible escalation of U.S.-China trade tensions.
The Monetary Authority of Singapore (MAS) said it would slightly increase the slope of the Singapore dollar`s policy band from zero percent previously, while keeping the width and mid-point of the band unchanged.
"This policy stance is consistent with a modest and gradual appreciation path of the S$NEER policy band that will ensure medium-term price stability," the MAS said.
The MAS manages monetary policy through exchange rate settings, rather than interest rates, letting the Singapore dollar rise or fall against the currencies of its main trading partners within in an undisclosed policy band based on its nominal effective exchange rate.
Twelve of 19 analysts in a Reuters survey predicted the MAS would tighten monetary policy this month for the first time since April 2012, by slightly increasing the appreciation rate of the Singapore dollar`s policy band from zero percent.
The remaining seven analysts expected the central bank to keep its policy-settings unchanged.