The effectiveness of exchange-rate-based monetary policy: evidence from survey data

ABSTRACT

Singapore’s monetary policy is centred on the management of the exchange rate. We examine how macroeconomic forecasters perceive the effectiveness of this unconventional policy. We provide empirical evidence that forecasters’ expectations are consistent with a forward-looking exchange-rate-based Taylor-type policy rule. They expect monetary authorities to actively manage the currency against expected future changes in inflation and output.

KEYWORDS:

• Monetary policy
• exchange rate
• forecasting
• survey data

JEL CLASSIFICATION:

• E37
• E52
• F31

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ This information is provided in the Q4 surveys.