Singapore: Monetary Authority of Singapore tightens monetary policy again in July
MAS tightens monetary policy unexpectedly for a second straight meeting: At its meeting on 27 July, the Monetary Authority of Singapore (MAS) decided to very slightly increase the rate of appreciation of the Singapore dollar nominal effective exchange rate (S$NEER) policy band. Analysts estimate the increment at around 25 basis points, bringing the rate of appreciation to 1.25%. This flew in the face of market expectations and marked a second consecutive tightening move, following an estimated 50 basis points increase in April, highlighting a cautious stance.
Central Bank flags broader inflation pass-through from Iran energy shock: The decision reflected MAS’s view that external price pressures from the Iran energy shock will linger and feed more widely into domestic consumer prices ahead, even as global economic activity proved more resilient than expected. The Bank left both its 2026 core and headline inflation forecasts unchanged at 1.5–2.5%—after raising them at the prior meeting—but warned that core inflation would rise from July and remain elevated into early 2027.
Meanwhile, the MAS noted that Singapore’s economy grew by a stronger-than-expected 5.7% year-on-year in the second quarter, aided by strong global electronics demand. The Bank projects GDP growth will stay firm through the second half of the year on the back of AI-related capex, construction activity and steady financial-sector expansion.
MAS seen standing pat through the end of the year: The Central Bank did not provide specific forward guidance on future monetary policy decisions, but most of our panelists expect Singapore’s monetary policy settings to remain unchanged through the end of this year.
Panelist insight: EIU analysts commented:
“We expect the MAS to leave its policy settings unchanged for the remainder of 2026. The July adjustment was deliberately modest, but, in combination with the April tightening and the S$NEER’s position in the upper half of the policy band, it should provide sufficient restraint as inflation rises over the next several months. The central bank will probably allow these measures to work through the economy before considering another adjustment.”
Goldman Sachs’ Chris Poh, Danny Suwanapruti and Andrew Tilton said:
“We estimate the neutral pace of appreciation of the SGD NEER to be around 1.00% per annum. On this basis, the estimated 1.25% appreciation represents a mildly restrictive monetary policy stance. […] Overall, we interpret July’s move as fine-tuning rather than the start of a sequence of progressively larger adjustments. We expect MAS to keep monetary policy settings unchanged for the remainder of 2026. However, we note that the risks of further tightening increases if global energy prices continue to increase and stay at an elevated level for a prolonged period.”