For now, we affirm the monetary policy stance announced in the April Monetary Policy Statement. WHY DID MAS RECORD A FINANCIAL LOSS AND IS IT CAUSE FOR CONCERN? I now turn to MAS' financial results. Let me start with the headline. MAS recorded a net loss of $ billion for FY22/23, reflecting the effects of monetary policy tightening to bring down inflation. This is the largest loss MAS has ever recorded. The loss was due to two factors: negative currency translation effects of a stronger Singapore Dollar; and  4/16  BIS - Central bankers' speeches  high interest expenses from mopping up excess liquidity in the banking system. I will explain these two factors in detail and address some pertinent questions: Is the loss cause for concern for MAS? Could the loss have been avoided or minimised? Does the loss affect the Government Budget? Let me start with currency translation effects. About 70% of the net loss or $ billion was due to the negative currency translation effects of a stronger Singapore Dollar. As we have explained on many past occasions, currency translation effects arise when MAS' Official Foreign Reserves (OFR) which are held in foreign currencies are reported in Singapore Dollars. If the Singapore Dollar weakens against the foreign currencies maintained in MAS' OFR, we will experience positive currency translation effects. Conversely, if the Singapore Dollar strengthens against the respective foreign currencies, we will experience negative currency translation effects.
Central banks have responded decisively to the inflation threat, with the most synchronised and rapid tightening of monetary policy in decades. Headline inflation in most economies has eased from its multi-decade highs. Global supply chain bottlenecks have been largely resolved. Oil and commodity prices have come down significantly. But core inflation is persistent, especially in the advanced economies. Services inflation has yet to show a sustained moderation given ongoing strength in demand and tight labour markets. It will take time for labour market imbalances to be resolved even as tighter monetary conditions gradually cool consumer demand. 1/16  BIS - Central bankers' speeches  In Singapore, growth prospects have dimmed and the economy will operate slightly below its underlying capacity. Growth has perceptibly slowed in recent quarters. The Singapore economy was within a hair's breadth of a technical recession, with sequential growth in Q4 2022 at 0.1% and in Q1 2023 at -0.4%. The two growth engines of the economy in the last three years – manufacturing and financial services – have stalled in recent quarters. Manufacturing is in recession and financial services has stopped growing in sequential terms since the middle of last year. The economy has been supported, however, by the domestic facing industries, including those benefiting from increased travel-related and tourism activity. Growth will remain weak in the near term. Manufacturing and financial services are expected to remain in the doldrums amid the weaker external outlook.