Economic Developments and Monetary Policy

STRENGTHENING THE MONETARY POLICY FORMULATION PROCESS

BOX 12
THE INDUSTRY CONSULTATION INITIATIVE - BUTTRESSING MONETARY POLICY FORMULATION

MAS embarked on the industry consultation initiative in October 2003, as part of the exchange rate policy review process. The objective of this initiative was to obtain the industry’s views on their business outlook going forward, including production, investment and recruitment plans. Each consultation typically involved on-site visits to 10 to 15 companies, representing important players within the manufacturing and services sectors in Singapore. The focus of the visits differed depending on areas of interest and issues at the time. For example, given that the IT sector was at a turning point, our focus was on garnering feedback from the electronics manufacturing companies during the September 2004 round of industry consultation. By consulting with different trade/industry associations, we gained a better understanding of the conditions facing the small and medium enterprises. The views collected, both qualitative and quantitative, served as useful inputs into our baseline forecasting exercise, as well as provided useful feedback from the ground on how monetary policy and exchange rates would affect different industries.

Such industry consultations are certainly not unique to Singapore. Other central banks, such as the U.S. Federal Reserve and the Reserve Bank of Australia also include industry consultation as part of their monetary policy formulation process. Going forward, MAS will continue to fine-tune the industry consultation process so as to leverage further on the views of businesses as background for policy formulation.