Singapore has made an unscheduled move to ease its monetary policy, with its central bank cutting the inflation forecast.
The Australian dollar immediately jumped 1.65% against the Singapore dollar after the Monetary Authority of Singapore (MAS) said it will reduce the slope of the policy band for the island’s dollar.
Other central banks in Asia are expected to follow Singapore’s lead to stimulate local economies, according to Morgan Stanley.
In Singapore, MAS says the outlook for inflation has shifted significantly since the last policy statement in October, largely due to the decline in global oil prices.
Core inflation moderated to 1.6% in the fourth quarter of 2014 from 2.1%.
And the monetary authority says inflation is expected to ease further before rising in the second half of 2015.
However, Singapore’s economy remains on track to grow at a moderate 2% to 4% in 2015.