Singapore's Central Bank Eases Monetary Policy Amid Cooling Inflation
Singapore's Monetary Authority of Singapore (MAS) has implemented its first monetary policy easing since 2020, as inflation pressures show signs of abating.
The MAS, which utilizes the exchange rate as its primary policy tool, announced that it will "reduce slightly" the slope of its policy band. The width and level of the band remain unchanged.
This move is in line with expectations from a majority of economists surveyed by Bloomberg News. The MAS had implemented five rounds of monetary tightening from October 2021, followed by an extended pause in 2023.
Singapore's core inflation, which excludes volatile items like food and energy, has eased below 2%, supporting the MAS's decision to ease policy. The central bank stated that this moderation has been faster than anticipated and that underlying price pressures are expected to remain low and stable.
Despite this easing move, the MAS remains cautious due to potential risks from global economic developments, particularly the impact of President Trump's proposed tariffs. The central bank will continue to monitor these risks closely and assess their impact on inflation and economic growth.
In 2024, Singapore's economy grew at its fastest pace in three years, surpassing government estimates. Bloomberg Economics estimates a 2.5% growth for 2025. The MAS's monetary policy review coincides with the Bank of Japan's expected increase in borrowing costs and the Federal Reserve's upcoming policy meeting, where future easing steps will be discussed.