SINGAPORE — Despite five consecutive tightening moves since October 2021, Singapore’s central bank has decided to keep its monetary policy settings unchanged, citing increasing global growth risks and decreasing inflation.

The Monetary Authority of Singapore, which primarily uses the exchange rate as its policy tool, announced on Friday that it would maintain the slope, center, and width of the currency band.

This decision coincided with the release of gross domestic product data, which revealed that the economy had contracted more than anticipated in the first quarter.

In a Bloomberg survey, 12 out of 22 respondents had predicted that the MAS would tighten its policy, indicating that it was seeking a stronger local currency to mitigate the effects of imported inflation pressures, while the remaining 10 anticipated a pause.

“With intensifying risks to global growth, the domestic economic slowdown could be deeper than anticipated,” the central bank said.

“While inflation is still elevated, MAS’s five successive monetary policy tightening moves since October 2021 have tempered the momentum of price increases. The effects of MAS’s monetary policy tightening are still working through the economy and should dampen inflation further.”

The MAS cautioned that prospects for Singapore’s GDP growth this year have dimmed, and cited investment and manufacturing drag from tighter financial conditions.

“Overall, growth in Singapore’s major trading partners will be slower in 2023, below the pace recorded in the previous two years,” according to the MAS.

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