UPDATE 3- Singapore steps up inflation fight with surprise central bank tightening

A view of the central business district in Singapore May 24, 2018. REUTERS/Edgar Su* Says move should help slow inflation momentum* Central bank raises full-year inflation projections SINGAPORE, July 14 - Singapore's central bank tightened its monetary policy on Thursday, in an off-cycle move, saying the action would slow inflation as the city-state joins other countries ramping up their battle against mounting price pressures.

"Clearly, MAS is very concerned about inflation. It is just going to try to do all they can to put the brakes on inflation," said Chua Hak Bin, an economist at Maybank. The U.S. Federal Reserve is seen stepping up its monetary tightening campaign with a supersized 100 basis point rate hike this month after a grim inflation report showed inflation racing at four-decade highs.

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Singapore's policy quirk lures bank funding rushGlobal banks are rushing to sell bonds in Singapore, where unique monetary settings have opened a favourable borrowing window that puts the city-state's debt markets on course for the biggest year of bank-capital raising in more than a decade. Singapore's central bank manages policy via its currency, rather than short-term rates, and one consequence has been the benchmark Singapore Overnight Rate Average (SORA) lagging a rise in comparable borrowing costs for U.S. dollars. Unlike other low-rate destinations in Europe or Japan, the Monetary Authority of Singapore is also keen on keeping the Singapore dollar steady, reducing currency risk, and investor appetite has been strong.
Source: YahooSG - 🏆 3. / 71 Read more »