MONETARY POLICY AND TARGETED MEASURES TO REIN IN FOOD AND ACCOMMODATION PRICES

MP Jamus Lim

Assoc Prof Jamus Jerome Lim (Sengkang): I thank the Minister of State. Since I was mentioned, I thought it would be useful to clarify with a follow-up question. Does MAS actually believe that its targeting of the exchange rate, which I understand, indeed, is the MAS intermediate target – I teach that in my classes – does not actually have any influence on the short-term interest rate prevailing in the money markets?

Mr Alvin Tan: I thank the Member for his supplementary question. As I mentioned earlier on, MAS’ monetary policy is focused on – in fact, it is our only approach towards monetary policy – our exchange rate-based policy. Interest rates are set upon by financial institutions. MAS, because of our open trade architecture, we use our exchange rate, not our interest rate, to manage inflation. So, I think that is critical.

The global environment, as the hon Member knows, is very fluid. That is why, over the course of a year, we have been very careful, very calibrated in our approach towards monetary policy. We have tightened monetary policy five times. We will deploy monetary policy as appropriate and as the circumstances change.

Prime Minister’s Office
9 November 2022

https://sprs.parl.gov.sg/search/#/sprs3topic?reportid=oral-answer-2963

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