(Bloomberg) — Singapore’s central bank is likely to keep monetary policy unchanged Wednesday as it allows fiscal measures to do the heavy lifting in getting the city-state’s economy back on track.

The Monetary Authority of Singapore, which uses the currency as its main policy tool rather than interest rates, probably will refrain from changing any of the three currency band settings, according to all 19 economists surveyed by Bloomberg.

chart: Singapore Monetary Policy History

© Bloomberg
Singapore Monetary Policy History

The MAS — which typically makes policy decisions twice a year, in April and October — took the unprecedented step in its last announcement of lowering the midpoint of the currency band and reducing the slope to zero. That meant it would allow for a weaker exchange rate to head off deflation and support the export-reliant economy.


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Since then, the economy has plunged into recession amid the pandemic and the government has unleashed billions of dollars of stimulus to save businesses and jobs. The city-state is slowly starting to shake off the impact of mobility restrictions and exports have continued to gain, but the recovery is likely to be a slow one as international travel restrictions remain and global demand stays weak.

“We’ve not seen the full extent of the crisis” and as much as 20% of the economy will face “deep scarring from which they may not recover,” MAS Managing Director Ravi Menon said Monday during a virtual forum hosted by the Institute of International Finance.

While the city-state has likely seen the worst of the GDP downswing, Menon said non-performing loans and bankruptcies probably will rise through the start of 2021.

The government has forecast a 5%-7% contraction in the economy this year, the worst since independence more than a half-century ago, and may revise that estimate when the Ministry of