Tharman Says Recent MAS Moves Not In Response To Inflationary Pressures

Source : Channel NewsAsia, 13 April 2008

Finance Minister Tharman Shanmugaratnam on Sunday said Singapore has to be on its guard against inflation, or the country's growth could be undermined.

Responding to questions about the recent monetary adjustments made by Singapore's central bank, Mr Tharman said the adjustments were not made in response to short-term inflationary pressures.

"If you don't continuously focus on the mid-term, we'll also lose the short-term game... You regret what you did not do three years ago, and you find yourself in deeper problems in the short term," he said.

The finance minister added that the Monetary Authority of Singapore (MAS)'s recent revisions to allow the Singapore dollar to appreciate at a faster pace have been gradual.

The Singapore dollar hit 1.36 against the greenback last week.

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The MAS moves are seen as a way to curb rising inflation, which hit a high of 6.6 per cent earlier this year.

But with a stronger Singapore dollar, there are concerns that this would hurt Singapore's exports to other countries.

Mr Tharman said there is always a trade-off between short-term and medium-term objectives.

"In the short term, the economy is performing at its potential. If it takes a severe dip, then we'll need other policy responses. But monetary responses cannot be geared towards short term... (or) you undermine growth."

The Singapore economy has performed better than expected in the first three months of 2008, growing 7.2 per cent on year.

For the entire year, Singapore's economy is expected to grow between four and six per cent while its inflation rate is estimated to be between 4.5 per cent and 5.5 per cent.

Mr Tharman was speaking to reporters while visiting the Central Sikh Temple where the community was celebrating the 300th anniversary of Gurgaddi Day and the Vesakhi festival.

Tamils in Singapore also celebrated their New Year on Sunday. Special prayer sessions were conducted, and devotees offered fruits and flowers to their favourite deities. - CNA/ac/ir