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INSTANT VIEW-Singapore stands pat on monetary policy

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* Q3 GDP -1.5 pct q/q vs median forecast of -1.0 pct

* Q3 GDP +1.3 pct y/y vs median forecast of +1.2 pct

* Singapore avoids recession with Q2 q/q revision

* Reiterates full-year GDP outlook

SINGAPORE, Oct 12 (Reuters) - Singapore defied expectationsby sticking to its tight monetary policy stance on Friday,warning of persistent inflationary pressures as data showed aquarterly contraction in third quarter gross domestic product.

But trade-dependent Singapore avoided a technical recessionas second quarter GDP was revised to show a slight expansion.

The Monetary Authority of Singapore said it will maintainits policy of allowing a modest and gradual appreciation of theSingapore dollar with no change to the slope, midpoint and widthof the trading band.

The Ministry of Trade and Industry said in a separatestatement the economy contracted 1.5 percent in the thirdquarter on an annualised and seasonally adjusted rate, slightlyworse than the median forecast of economists polled by Reuters.

COMMENTARY WAI HO LEONG, AN ECONOMIST AT BARCLAYS

"Clearly there is a very strong job market and a sense thatthe drop in GDP in the third quarter will be one-off and will bereversed very quickly in the fourth quarter."

"However this decision (to keep the policy unchanged) couldspark a rush of foreign capital into Singapore dollar assetsgiven the better-than-expected outcome."

"We could see more flows into Sing dollar assets in thecoming weeks and we could see more testing of the upper limit ofthe band."

SONG SENG WUN, ECONOMIST AT CIMB

"I am a bit surprised that MAS chose to maintain given signsthat global growth momentum has lost steam and many othercentral banks have chosen to ease."

"I suppose the fact that we averted a technical recessionand the worry about the impact of the tight labour marketprobably kept them from easing."

"That's another thing to note, growth is slower but stilllikely to come in within the growth forecast, although at thelower end. Inflation risk is still a nagging concern."

MARKET REACTION

- The Singapore dollar jumped after the centralbank's surprise decision to stand pat on policy. Around 0830GMT, the Singapore dollar was trading around 1.2221 to the U.S.dollar compared with 1.2279 before the announcement.

- For news on the Singapore economy, see

- To track Singapore economic data, click

(Reporting by Kevin Lim; Editing by Sanjeev Miglani and JohnO'Callaghan)

((Kevin.Lim@thomsonreuters.com)(65)(6403 5663))

Keywords: SINGAPORE ECONOMY/GDP