MPC unanimous on Rate hold

Yuan Phoon

December 21, 2011

The Committee agreed that a change in policy was not warranted against the background of continuing weakening in labour market and the magnitude of uncertainties with the international economy.

The Committee set monetary policy in order to meet the inflation target in the medium term.

Inflation remained well above the 2% target because of the temporary impact of the VAT increase and higher energy and import prices, the MPC claimed.

It did however say that inflation was likely to fall sharply in the first part of 2012 as the impact of those temporary factors dissipated.

It said: “There was greater uncertainty about the pace at which inflation would continue to fall thereafter but the Committee’s central view remained that downward pressure from elevated unemployment and spare capacity would continue to restrain domestically generated inflation.”

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