consumer price inflation

Singapore Central Bank news update

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Singapore maintains policy band, sees higher H2 inflation – Central Bank News.

Singapore’s central bank held its policy stance steady, saying the current “modest and gradual appreciation of the S$NEER policy band” is appropriate to contain inflationary pressures, anchor expectations and facilitate the restructuring of the economy toward sustainable growth.
    The Monetary Authority of Singapore (MAS), which targets the Singapore dollar against a basket of undisclosed foreign currencies rather than inflation, said the country’s economy should expand modestly in 2013 with a tight labor market exerting some upward pressure on core inflation in the latter half of this year as higher wage costs are passed through to consumers.
    In 2013 Singapore’s Gross Domestic Product is expected to expand by 1-3 percent, with growth gradually improving during the year on the back of a recovery in external demand.
    Consumer price inflation is forecast at 3-4 percent with average core inflation forecast at 1.5-2.5 percent, but rising moderately in the second half of the year through “persistent tightness in the labour market.”
    Singapore’s GDP shrank by 1.4 percent in the first quarter of 2013 from the fourth quarter, according estimates by the Ministry of Trade and Industry, following a quarterly rise of 3.3 percent in the fourth quarter.
    Singapore’s core inflation rate, which excludes private road transport and accommodation costs, eased to an annual rate of 1.5 percent in January-February from 2.0 percent in the fourth quarter and 2.4 percent in the third quarter of 2012, the MAS said, helped by favourable supply conditions in commodity markets and the impact of the currency’s appreciation.
    During the same period, the all-items inflation rate averaged 4.0 percent.
    For 2013, MAS is lowering its core inflation forecast to 1.5-2.5 percent from a previous forecast of 2.0-3.0 percent due to lower-than-expected price rises over the past few months, it said.
    The all-items inflation rate is forecast at 3-4 percent, down from a previous forecast of 3.5-4.5 percent.
    “The outlook for the world economy has improved since late last year, although uncertainties remain, particularly with regard to Europe,” MAS said, with economic recovery underpinned by the gradual pickup in the U.S. housing market and private demand, as well as fiscal stimulus in Japan.
    Economic activity in China should be sustained on the back of robust domestic demand and the rest of Asia will see continued moderate growth, giving a modest lift to the global IT industry following a contraction in 2012.
    Singapore’s manufacturing sector and export-oriented industries should improve gradually over the year with the economy’s level of output converging to its underlying potential and the labour market remaining a full employment, partially reflecting supply-side constraints, it said.
    MAS, which previously issued a monetary policy statement in October 2012, said the Singapore dollar’s nominal effective exchange rate (S$NEER) had fluctuated in the upper half of its policy band over the last six months with the broad-based decline in the Japanese yen leading to upward pressure.
    But this was countered by “bouts of domestic currency weakness” due to a strengthening of the U.S. dollar on speculation over an early exit from quantitative easing by the Federal Reserve and renewed uncertainty over the European debt crises, MAS said.
    Economists had expected the MAS to hold its policy stance steady.
    The MAS adjusts the rate of appreciation of the Singapore dollar against a basket of currencies by changing the slope, width and center of the trading band.

    www.CentralBankNews.info

Egypt raises rate as high inflation is harmful to economy – Central Bank News

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Egypt raises rate as high inflation is harmful to economy – Central Bank News.

Egypt’s central bank raised its key interest rates by 50 basis points, saying inflationary expectations are more harmful to the economy over the medium term despite the risks to the outlook for growth.
    The Central Bank of Egypt (CBE), which last raised rates in November 2011, said it was closely monitoring all economic developments and would not “hesitate to adjust the key CBE rates to ensure price stability over the medium‐term.”
     Egypt’s headline consumer price inflation rose by a monthly 2.5 percent in February – the highest monthly rise since August 2010 – to an annual rate of 8.21 percent due to broad increases in food and non-food prices on the back of changes in the exchange rate and dielsel distribution bottlenecks across the country, the central bank said.
   “While the probability of a rebound in international food prices is less likely in light of recent global developments, the re‐emergence of local supply bottlenecks and distortions in the distribution channels pose upside risks to the inflation outlook,” the CBE said, adding:
    Despite the downside risks to the GDP outlook, the MPC judges that disanchored inflation expectations are more detrimental to the economy over the medium term. Hence, a rate hike is warranted.”
    The CBE raised its overnight deposit rate by 50 basis points to 9.75 percent, the overnight lending rate to 10.75 percent and the main operation rate to 10.25 percent. The discount rate was raised by 75 basis points to 10.25 percent.

    Egypt’s Gross Domestic Product expanded by 2.2 percent in the fourth quarter from the third quarter for annual growth of 2.2 percent, down from 2.5 percent in the third quarter.
    The central bank said economic growth was suppressed by continuing weakness in the manufacturing sector and investment is low given heightened uncertainty.
    “While the slowdown in economic growth has been limiting upside risks to the inflation outlook, there is a possible build‐up of upward pressures on inflation going forward for the previously mentioned reasons,” the CBE said.

    www.CentralBankNews.info