SINGAPORE: The Monetary Authority of Singapore (MAS) kept its exchange rate-based monetary policy unchanged on Tuesday (Oct 14), in line with market expectations.
In its October monetary policy statement, the Singapore central bank said it will “maintain the prevailing rate of appreciation” of its Singapore dollar nominal effective exchange rate (S$NEER) policy band.
There are no changes to the width of the policy band and the level at which it is centred.
“MAS is in an appropriate position to respond effectively to any risk to medium-term price stability and will continue to closely monitor economic developments amid uncertainties in the external environment,” it said in its policy statement.
Ten out of 14 analysts polled by Reuters had expected the MAS to hold off making changes in this scheduled review after standing pat in July when second-quarter growth came in stronger than expected.
Before that, it eased monetary policy twice – in January and April – to support growth on the back of tariff concerns. The MAS holds four policy reviews a year.
Unlike most central banks that manage monetary policy through interest rates, MAS manages monetary policy by letting the local dollar rise or fall against the currencies of its main trading partners within an undisclosed band, known as the S$NEER.
It adjusts its policy by changing the slope, mid-point and width of the band.
Noting that it had made two easing moves this year, the MAS said Singapore’s economic growth “has turned out stronger than expected”.
The output gap - defined as the economic measure of the difference between the actual output of an economy and its potential - will remain positive this year and come in around 0 per cent in 2026.
It described the global economy as having remained "broadly resilient" since its last policy review.
“The staggered implementation of tariffs by the US has sustained the front-loading of shipments globally which, alongside robust artificial intelligence-related investments, has buoyed manufacturing production and trade in Singapore’s major trading partners,” its statement said.
Global growth should moderate as front-loading activity fades while labour markets soften in the quarters ahead, but “the extent of the downturn should be contained”.
Advance estimates released on Tuesday morning showed the Singapore economy slowing in the third quarter.
Gross domestic product (GDP) grew 2.9 per cent year on year, moderating sharply from 4.5 per cent growth in the previous quarter, based on advance estimates released by the Ministry of Trade and Industry (MTI).
On a quarter-on-quarter seasonally-adjusted basis, the economy expanded by 1.3 per cent. This was “only slightly slower” than the 1.5 per cent growth in the second quarter, said MAS, adding that growth has surpassed expectations on the back of the manufacturing and domestic consumer-facing sectors.
While Singapore’s growth is expected to moderate in the upcoming quarters, continuing global investments related to artificial intelligence will provide some support to the domestic manufacturing sector. In the meantime, growth in the construction and financial services should be bolstered by infrastructure investment and accommodative financial conditions, respectively, the central bank said.
GDP growth forecasts for 2025 and 2026 will be announced in November by MTI.
In August, MTI had upgraded Singapore’s full-year growth forecast range to 1.5 to 2.5 per cent, from 0 to 2 per cent before.
Turning to inflation, the MAS expects core inflation, which excludes accommodation and private transport costs, to “trough in the near term” before rising gradually over the course of 2026.
The key inflation indicator should average around 0.5 per cent for this year and come in between 0.5 and 1.5 per cent next year.
Headline inflation is expected to average between 0.5 and 1 per cent this year. For 2026, the central bank sees it coming in between 0.5 and 1.5 per cent.
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In its October monetary policy statement, the Singapore central bank said it will “maintain the prevailing rate of appreciation” of its Singapore dollar nominal effective exchange rate (S$NEER) policy band.
There are no changes to the width of the policy band and the level at which it is centred.
“MAS is in an appropriate position to respond effectively to any risk to medium-term price stability and will continue to closely monitor economic developments amid uncertainties in the external environment,” it said in its policy statement.
Ten out of 14 analysts polled by Reuters had expected the MAS to hold off making changes in this scheduled review after standing pat in July when second-quarter growth came in stronger than expected.
Before that, it eased monetary policy twice – in January and April – to support growth on the back of tariff concerns. The MAS holds four policy reviews a year.
Unlike most central banks that manage monetary policy through interest rates, MAS manages monetary policy by letting the local dollar rise or fall against the currencies of its main trading partners within an undisclosed band, known as the S$NEER.
It adjusts its policy by changing the slope, mid-point and width of the band.
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Noting that it had made two easing moves this year, the MAS said Singapore’s economic growth “has turned out stronger than expected”.
The output gap - defined as the economic measure of the difference between the actual output of an economy and its potential - will remain positive this year and come in around 0 per cent in 2026.
It described the global economy as having remained "broadly resilient" since its last policy review.
“The staggered implementation of tariffs by the US has sustained the front-loading of shipments globally which, alongside robust artificial intelligence-related investments, has buoyed manufacturing production and trade in Singapore’s major trading partners,” its statement said.
Global growth should moderate as front-loading activity fades while labour markets soften in the quarters ahead, but “the extent of the downturn should be contained”.
Advance estimates released on Tuesday morning showed the Singapore economy slowing in the third quarter.
Gross domestic product (GDP) grew 2.9 per cent year on year, moderating sharply from 4.5 per cent growth in the previous quarter, based on advance estimates released by the Ministry of Trade and Industry (MTI).
On a quarter-on-quarter seasonally-adjusted basis, the economy expanded by 1.3 per cent. This was “only slightly slower” than the 1.5 per cent growth in the second quarter, said MAS, adding that growth has surpassed expectations on the back of the manufacturing and domestic consumer-facing sectors.
While Singapore’s growth is expected to moderate in the upcoming quarters, continuing global investments related to artificial intelligence will provide some support to the domestic manufacturing sector. In the meantime, growth in the construction and financial services should be bolstered by infrastructure investment and accommodative financial conditions, respectively, the central bank said.
GDP growth forecasts for 2025 and 2026 will be announced in November by MTI.
In August, MTI had upgraded Singapore’s full-year growth forecast range to 1.5 to 2.5 per cent, from 0 to 2 per cent before.
Turning to inflation, the MAS expects core inflation, which excludes accommodation and private transport costs, to “trough in the near term” before rising gradually over the course of 2026.
The key inflation indicator should average around 0.5 per cent for this year and come in between 0.5 and 1.5 per cent next year.
Headline inflation is expected to average between 0.5 and 1 per cent this year. For 2026, the central bank sees it coming in between 0.5 and 1.5 per cent.
Continue reading...