Singapore: Monetary Authority of Singapore stands pat in July
Monetary Authority of Singapore in wait-and-see mode: At its meeting on 30 July, the Monetary Authority of Singapore (MAS) decided to maintain the prevailing rate of appreciation of the Singapore dollar’s nominal effective exchange rate (S$NEER) policy band, without altering its width or the level at which it is centered. This comes after two successive rounds of monetary policy easing. The decision matched market expectations.
Economic resilience and stable inflation drive the decision: Two key drivers were behind MAS’s move: Economic growth and inflation. Regarding the first, MAS noted that global economic growth has been more resilient than earlier anticipated recently, supporting external demand. That said, MAS still expects the Singaporean economy to lose momentum in H2 on the back of fading export frontloading and the implementation of new U.S. tariffs. Regarding the second, inflation has remained stable and overall subdued in the past months, and is expected to stay low in the short term.
MAS to cut again by end-2025: MAS did not provide specific forward guidance on future monetary policy. Most of our panelists expect MAS to loosen monetary policy by the end of 2025 as economic headwinds mount. That said, an increasing number now see the next easing move coming only in 2026. Higher-than-expected core inflation could halt the policy easing cycle, while weaker-than-anticipated economic growth could prompt MAS to loosen its policy settings more aggressively.
The Bank’s next meeting will be no later than 14 October.
Panelist insight: Commenting on the outlook, Jester Koh, analyst at United Overseas Bank, stated:
“We still expect MAS to ease policy by shifting to a zero percent S$NEER band appreciation stance in the Oct 2025 MPS (or Jan 2026 MPS) once the payback effects from front-loading and the impact of tariffs more clearly translate into slowing growth momentum.”
A more hawkish opinion came from ING’s Deepali Bhargava:
“Any further policy adjustment will likely require clearer signs of economic weakness. Specifically, we think MAS would need to see growth slow enough to push the output gap back into negative territory – versus its current projection of a zero – before considering another cut. Hence, while an easing in the October policy meeting can’t be ruled out, we put only a small probability on it at this stage.”