Tighter policy helps offset rising costs for local consumers

The move by the central bank to tighten monetary policy is a “macro” decision that will have practical effects on the price of goods for a typical Singaporean.

- Sue-Ann Tan

A tight policy means a country reduces the so-called money supply, said Professor Lawrence Loh of the National University of Singapore Business School, noting: “This is usually done to cool the economy which is, or is expected to be, growing too fast.

“A tight policy can bring down prices; in other words, control inflation.”

Yesterday’s MAS announcement means that the Singdollar will strengthen relative to the currencies of other countries, which may reduce the price of imports.

This also suggests travellers from here might enjoy more favourable exchange rates when they head overseas, said CIMB Private Banking economist Song Seng Wun.