Inflation is expected to rise to 0.5-1.5 percent next year from 0.0-0.5 percent this year but the current monetary policy stance should tame inflationary pressures, the Monetary Authority of Singapore (MAS) said.

Singapore's monetary policy involves managing the Singapore dollar which is traded against a basket of currencies of its major trading partners.

The actual band, known as the nominal effective exchange rate (NEER), is undisclosed to prevent speculation in the currency.

"MAS will maintain its current policy of a modest and gradual appreciation of the NEER policy band which has been adopted since April 2004," the central bank said in a twice-yearly policy statement.

"CPI (consumer price index) inflation is expected to rise next year on the back of higher global inflation and domestic costs but should remain relatively contained under the current policy stance," the bank said.

The MAS policy statement follows Monday's release of preliminary figures that showed the economy grew 6.0 percent year-on-year in the third quarter, faster than the revised 5.4 percent expansion recorded in the second.

In its outlook, the central bank said growth this year is expected to be at the high end of the official target of 3.5-4.5 percent, with the economy showing resilience despite high oil prices.

"Amidst continued growth in external economies, the Singapore economy is likely to keep close to its potential output trajectory this year and in 2006," MAS said.

                                                      Home