Selected Issues Papers

Exchange Rate Pass-Through to Inflation in Singapore: Singapore

By Kodjovi M. Eklou

August 13, 2024

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Kodjovi M. Eklou Exchange Rate Pass-Through to Inflation in Singapore: Singapore, (USA: International Monetary Fund, 2024) accessed October 3, 2024

Summary

Singapore has addressed high inflation over the past years amid a tight labor market through several rounds of tightening of the exchange rate-based monetary policy. This paper estimates the exchange pass-through to inflation in Singapore with a particular focus on the role of labor market conditions. The paper first finds a strong exchange rate pass-through to inflation in Singapore, after accounting for the potential endogeneity of changes in the exchange rate. Further, it uncovers that labor market tightness dampens exchange rate pass-through and therefore could weaken monetary policy transmission. Overall, the results suggest that monetary policy should be more vigilant under a tight labor market condition. The paper then draws policy implications for taming inflation under tight labor market conditions.

Subject: Consumer price indexes, Exchange rate pass-through, Exchange rates, Foreign exchange, Inflation, Labor, Labor markets, Prices

Keywords: $NEER appreciation shock, Consumer price indexes, Exchange rate pass-through, Exchange rate pass-through to inflation, Exchange rates, Global, Inflation, Inflation development, Labor market conditions, Labor market tightness, Labor markets, Monetary Policy, Pass-through to inflation, Services inflation

Publication Details

  • Pages:

    24

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Selected Issues Paper No. 2024/039

  • Stock No:

    SIPEA2024039

  • ISBN:

    9798400283796

  • ISSN:

    2958-7875