Singapore’s unusual monetary arrangements have long included a currency board-type backing of domestic currency and a structural government surplus; it liberalised financially relatively early, tried exchange rate pegging but found it more efficient to vary the exchange rate to offset external inflationary pressures, and by 1986 this had become an idiosyncratic but systematic form of inflation targeting.
| Years | Targets and attainment | Classification |
| 1974-75 | currency floating, no other targets but concern with price stability; domestic financial liberalisation by mid-1975, with monetary operations moving from credit ceilings to rediscount facilities and reserve requirements; domestic currency backed by forex reserves as in currency board | loosely structured discretion LSD |
| 1976-80 | currency pegged to undisclosed basket (within undisclosed margins); full capital account liberalisation by 1978, active autonomous forex market; monetary policy operated via indirect instruments, increasingly forex swaps; government budgetary operations typically contractionary | loose exchange rate targeting LERT |
| 1981-85 | more active variation of exchange rate (in form of appreciation) to maintain confidence in currency and offset external inflationary pressures, but with eye to competitiveness and growth as well | loosely structured discretion LSD |
| 1986-2023 | active exchange rate control (with first deliberate depreciation 1986-7) is by now developing into a form of sui generis inflation targeting, where centre, path and width of exchange rate band are set at intervals in forward-looking way so as to maintain price stability – informal target initially understood widely to be below 3%, with emphasis on core as well as CPI inflation, by 2020s understood to be 2% on core inflation; monetary strategy becomes more formalised and more publicised over time, with gradual increases in transparency, e.g. direction of exchange rate movement announced in broad terms twice each year from mid-2001 (but neither exchange rate index nor exact centre, rate of crawl and width of band are published, nor is the inflation target), more data on forex purchases published from 2019; more use of macroprudential policies since GFC; implied inflation targets exceeded three years and undershot four, out of 36 years, but otherwise met or near-met, medium-term inflation expectations remain broadly anchored; government budgetary operations contractionary; monetary policy operations involve changes to slope, width and mid-point of exchange rate band, supported by forex interventions, money market transactions and liquidity facilities; strong impact of but strong and effective policy response to Covid-19; 2022 sharp rise in inflation mainly from external pressures, response to which involves (as normal) repeated small exchange rate appreciations, and medium term inflation expectations remain firmly anchored | loose inflation targeting LIT |
Selected IMF references: RED 1975 pp23-6, 39-41; RED 1978 pp19-20; RED 1982 pp29-30, 48-9; SR 1982 pp11-12, 14; RED 1983 pp30-2; SR 1986 pp13-15; SBI 1994 pp40-2; SR 1994 p9; SR 1998 p8; SR 2000 pp6-7; SR 2002 p10-11; SR 2004 p14; SR 2007 p10; SR 2015 p8; SR 2016 p56; SI 2016; SR 2018 pp14-15; SR 2019 pp15-18, 67-72; SR 2021 pp6-7, 14; SR 2022 pp18, 77-8; SR 2023 pp7-8, 19-20, 35; SR 2024 pp7, 13-14, 35.
Additional sources: Monetary Authority of Singapore (2001, 2013); Parrado (2004); Khor et al. (2004).
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Monetary Policy Frameworks 