The city-state's trade-dependent economy is highly susceptible to swings in global inflation and the central bank's sudden move comes as price pressures ring alarm bells for policymakers elsewhere in Asia.
The Monetary Authority of Singapore , which manages monetary policy through exchange rate settings, said it would slightly raise the rate of appreciation of its policy band. Last year, many Asia-Pacific economies largely shrugged off inflationary threats that had rattled policymakers in Europe and the United States but that thinking now appears to be shifting.
Elsewhere, investors expect the U.S. Federal Reserve to raise its benchmark interest rate in March with the central bank likely to step up its rhetoric against inflation at its meeting this week. The central bank is due to review its stance in April, when it was widely expected by economists to tighten again.'DOUBLE TIGHTENING'"2022 will be year of double tightening for Singapore - both fiscal and monetary levers will grind tighter," said OCBC's Ling.
The MAS forecasts core inflation to be 2.0-3.0% this year, from the 1.0-2.0% expected in October. Headline inflation is expected to be 2.5-3.5%, from the earlier forecast range of 1.5-2.5%.
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