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OUR MISSION
OUR OBJECTIVES
 
ECONOMIC DEVELOPMENTS AND
MONETARY POLICY
D ECONOMIC DEVELOPMENTS AND MONETARY POLICY  
 
The World Economy: Robust Growth on  
the Strenght of the US Economy  
70
 
International Financial Markets: Resilience  
in the Face of Uncertainties
71
 
Singapore Financial System
 
Remains Sound  
74
 
Singapore Economy: Ending on a High Note  
74
 
Monetary Policy Amid Continued Growth  
and Emerging Inflationary Pressures  
77
 
Strengthening the Monetary Policy
 
Formulation Process  
77
 
Pushing the Frontier of Monetary Policy
 
Research and Analysis  
78
 
Box 16 – Assessing Market Response to  
MAS’ Monetary Policy  
79
 
  MONETARY POLICY AMID CONTINUED GROWTH
AND EMERGING INFLATIONARY PRESSURES
 

As the economy moved back to its potential output path, monetary policy has gradually been less accommodative in the past two years. In April 2005, MAS reaffirmed the current policy of a modest and gradual appreciation of the Singapore Dollar Nominal Effective Exchange Rate (S$NEER) policy band adopted since April 2004. This policy stance was reiterated in July 2005, following the announcements of changes to the exchange rate systems in China and Malaysia, and reaffirmed in October 2005.

Against the backdrop of continued underlying growth support for the Singapore economy, MAS announced in its latest Monetary Policy Statement (MPS) on 11 April 2006 that it would maintain the current policy of a modest and gradual appreciation of the S$NEER policy band, with no re-centring of the policy band, and no changes to its slope or width. We assessed that overall domestic inflationary pressures would be contained under this policy stance, especially since liquidity conditions have tightened significantly since the October 2005 policy review.