Monetary Policy in Singapore and the Global Financial Crisis

SINGAPORE’S MONETARY POLICY RESPONSE

TO THE FINANCIAL CRISIS

Prior to the crisis the consensus amongst central bankers in advanced

economies was that price stability, in the form of low and stable price

inflation, was a top priority for monetary policy and could best be

achieved by targeting interest rates (usually overnight) or monetary

aggregates, such as Narrow Money (M1) and Broad Money (M2).

Liquidity in the banking system could be flexibly adjusted on a daily

basis through open market operations to increase or decrease the

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