Singapore’s Tough Inflation Call Is a Warning for Global Trading

Singapore’s monetary tightening says a lot about the delicate state of the world economy. The Middle East conflict is spawning twin afflictions: a notable slowdown in growth and an unwelcome pickup in inflation. Hoping for a speedy resolution is fine, but it's prudent to prepare for protracted hostilities. And the global trading hub, usually in the vanguard of fighting price pressures, just showed how it’s done.

The Monetary Authority of Singapore, which uses the exchange rate rather than interest rates to steer the economy, took out some insurance against a poor outcome. The central bank said on Tuesday it will increase the slope of the band in which it wants the local dollar to trade. The city-state imports much of what households and businesses consume; an appreciating currency helps counter inflation.