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MAS Terms

MAS said it would keep to its policy of allowing a modest and gradual appreciation of the Singapore dollar.

It added that it was keeping to its full year economic growth forecast of 5-7% for 2007.

That's more conservative than the 8% expansion now forecast by most private sector economists, after better-than-expected numbers for the first half.

The Singapore economy grew 7.3% in the first half, powered by ongoing expansion in the transport engineering, biomedical manufacturing and services sectors.

But inflation continues to be a key concern for MAS. It noted that business costs like wages and rentals have risen rapidly recently.

CPI is expected to pick up in the second half, with the GST hike in July and some price increases in food and transport.

The central bank expects CPI for the full year to come in at the upper end of its forecast range of 0.5-1.5%. It foresees inflation creeping up by 1-2% next year.