Singapore's Central Bank Faces Monetary Policy Decision
Economists are divided on the Monetary Authority of Singapore's (MAS) monetary policy decision this Friday.
A Reuters poll reveals that six analysts anticipate a loosening of the currency-based monetary policy, citing eased inflation and stronger economic growth in 2024. The remaining six expect no changes.
Notably, MAS has maintained its policy settings since an October 2022 tightening. Jonathan Koh, Standard Chartered Bank's Asia economist, believes MAS may delay action to assess the impact of U.S. President Donald Trump's second-term policies.
Lee Yen Nee, of Fitch Solutions unit BMI, suggests Singapore's economic resilience allows MAS to take a more measured approach.
Globally, central banks are cautiously cutting rates. The Federal Reserve recently reduced rates, but a Reuters poll anticipates a pause this month due to inflation concerns over Trump's policies. The European Central Bank has indicated further cuts, but emphasizes caution amid uncertainties.
Singapore manages monetary policy by controlling the value of the Singapore dollar (S$) against its trading partners' currencies within an undisclosed band. MAS adjusts policy through the slope, mid-point, and width of this band.
Maybank economist Chua Hak Bin anticipates a loosening, citing benign inflation prospects. He forecasts a gentler appreciation of the S$NEER's slope, with core and headline inflation continuing to decline.
Bank of America analysts predict no policy change, but a dovish stance with a possible easing at the next scheduled review in April when there will be more clarity on inflationary pressures and the Singapore budget's impact.
Singapore's economic health is often considered a bellwether for global growth. Its trade volume far exceeds its domestic economy, and GDP growth surprised positively in 2024, reaching 4%. The Trade Ministry projects growth of 1.0% to 3.0% in 2025.