By Chen Lin

SINGAPORE (Reuters) – Singapore’s central bank is expected to leave monetary policy on hold at its October review, analysts say, as highly transmissible coronavirus variants spread locally and across the world, threatening the pace of economic recovery.

A Reuters poll of 11 economists this week found that all expect the Monetary Authority of Singapore to maintain its exchange-rate based policy settings at its biannual meeting, which is due Oct. 14.

The spread of the Delta variant continues to impede global economic growth. Denise Cheok (NYSE:) Analytics, an economist, said that the COVID-19 condition in Singapore is worsening with record-breaking daily cases. The central bank will not tighten its monetary policy at such an important time.

This year the economic growth of the cit-state will be between 6% and 7%, following last year’s record recession that saw the financial hub hit hard by the pandemic.

The central bank of Singapore manages the monetary policy by setting exchange rates. This allows the dollar to rise and fall relative to the currencies of the main trading partners.

The central bank held its position at the April last review and kept the rate of appreciation in place at zero per annum.

Economists predicted that the central banks would tighten its belt in October if there were no new pandemics.

The new COVID-19 infections in Singapore have reached record levels of over 2,000 in just a few days. This prompted authorities to increase their security measures, despite Singapore having one of the lowest vaccination rates at 82%.

Economists warned that the restrictions could slow down recovery in consumer-facing industries like aviation, retail, and food and drink. Singapore’s government has allocated S$650 million (or $480 million) for businesses that have been affected by the new measures.

Five economists suggested that the MAS could tighten monetary policies in April. The core inflation rate, Singapore’s preferred price measure and the main indicator of central bank policy, hit an August high of two years. However economists predict that prices will remain benign in the near term with gradual rises.

Alex Loo of TD Securities, macro strategist said that MAS could sound more hawkish in order to set markets up for a tightening meeting at April 2022. With economic growth expected to remain robust through 2022, and core inflation pressures slowly building, we can expect MAS’s tone to be more dovish.

($1 = 1.3533 Singapore dollars)