SINGAPORE (Reuters – Singapore’s central banks said Tuesday they were tightening their monetary policy as inflation risk rises.

Monetary Authority of Singapore manages monetary policy via exchange rate settings rather than interest rates. The Singapore dollar can rise or fall in relation to its main trading partners, within an unknown band.

It uses three levers to adjust its policy, the slope, the mid-point, and the width of the policy range, also known as the Nominal Exchange Rate or S$NEER.

The MAS stated that it will increase slightly the appreciation rate for its policy bands. It will not change the width or the location at which the policy band is centered.

The move was a continuation of the October 2021 pre-emptive shift towards an appreciating position and it is suitable for ensuring medium term price stability.” It was referring back to its tightening late last year.

Just a few days after data revealed that Singapore’s main price index grew at the fastest rate in almost eight years, Tuesday’s tightening was evident.