## Exchange Rate Pass-Through to Inflation in Singapore: Singapore

_Selected Issues Papers, August 13, 2024_

## Source details

**Canonical URL:** [Exchange Rate Pass-Through to Inflation in Singapore: Singapore](https://www.imf.org/en/publications/selected-issues-papers/issues/2024/08/23/exchange-rate-pass-through-to-inflation-in-singapore-singapore-553475)

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## Bibliographic details
- Authors: Kodjovi M. Eklou
- Published: August 13, 2024
- Series: Selected Issues Papers
- DOI: https://doi.org/10.5089/9798400283796.018

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### Key findings
- 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.
- The paper estimates exchange rate pass-through to inflation in Singapore and finds a strong exchange rate pass-through to inflation after accounting for the potential endogeneity of changes in the exchange rate.
- Labor market tightness dampens exchange rate pass-through and therefore could weaken monetary policy transmission.
- Overall conclusion: monetary policy should be more vigilant under a tight labor market condition.

### Role of labor market conditions
- Labor market tightness reduces the effectiveness of exchange rate movements in lowering inflation by dampening exchange rate pass-through.
- Tight labor market conditions can therefore weaken the transmission of exchange rate–based monetary policy to inflation outcomes.

### Policy implications and recommendations
- Monetary policy should be more vigilant under tight labor market conditions.
- Drawn implications focus on taming inflation under tight labor market conditions (policy guidance emphasizes greater vigilance given dampened pass-through).

### Publication and metadata
- Author: Kodjovi M. Eklou
- Date: August 13, 2024
- Series: Selected Issues Paper No. 2024/039
- Issue: 039
- Volume: 2024
- Pages: 24
- DOI: https://doi.org/10.5089/9798400283796.018
- ISBN: 9798400283796
- ISSN: 2958-7875
- Subjects: 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

*Source: Kodjovi M. Eklou, "Exchange Rate Pass-Through to Inflation in Singapore: Singapore", Selected Issues Papers 2024/039.*

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_Source: https://www.imf.org/en/publications/selected-issues-papers/issues/2024/08/23/exchange-rate-pass-through-to-inflation-in-singapore-singapore-553475_