Economists expect MAS to hold steady in October amid tariff uncertainty, with final monetary policy easing in 2026 instead

[SINGAPORE] Economists largely expect the Monetary Authority of Singapore (MAS) to keep policy settings unchanged in October, even as trade headwinds mount, and the US threatens fresh sectoral tariffs. 

While some analysts see room for a modest easing, most believe MAS will reserve its next easing move – possibly the final one for this cycle – for 2026.

They expect such a move to involve flattening the slope of the Singapore dollar nominal effective exchange rate (S$NEER) policy band, rather than make changes to its width or where it is centred.

Singapore’s central bank began the current easing cycle at the start of 2025, in its January and April meetings, then keeping policy settings unchanged in July.

In MAS’ August survey of professional forecasters, more than half the respondents expected the central bank to hold steady for the year’s final review in October, and 42 per cent expected another round of easing. 

Recent economist reports and comments suggest that these expectations still hold. Meanwhile, full-year growth forecasts have not shifted much, despite recent trade developments.

On Sep 26, the US announced plans for a 100 per cent tariff on imports of branded or patented pharmaceutical goods from Oct 1, unless a company has already begun construction of a plant in the US.

Singapore’s pharmaceutical exports to the US are significant, accounting for about 13 per cent of domestic goods exports, at S$4 billion.

Still, Deputy Prime Minister Gan Kim Yong said a day later that these tariffs may have “no immediate impact” on Singapore-based drugmakers, because many could qualify for exemptions.

Reasons to wait

Besides pharmaceuticals, Washington is also threatening sectoral tariffs on semiconductors.

But OCBC’s chief economist Selena Ling noted that tariffs have yet to be implemented or finalised, and that sentiments have gradually recovered since the first tariff announcements in early April.

“As such, there may be a preference to keep some policy powder dry and hold what is possibly the final S$NEER slope flattening for a later stage when needed – for example, 2026, instead.”

She noted that historically, MAS has taken a zero per cent appreciation stance – that is, flattening the S$NEER slope – during times of crisis. 

For October, Ling expects no change, as do Barclays, Maybank, RHB, UOB, and HSBC.

UOB associate economist Jester Koh sees easing in January as more likely, with a probability of 55 per cent, compared to a 45 per cent chance in October.

While exports contracted in August, a few more months of data are needed to confirm whether the slowdown was genuine, and to gauge how much of it reflected payback from earlier front-loading, he said.

UOB assumes that the S$NEER is currently trading at around 140 basis points above the midpoint of the policy band, down from 190 bps in late June. This suggests sufficient room for the Singapore dollar to weaken and cushion downside risks, said Koh.

Maybank economists Chua Hak Bin and Brian Lee said the impact of weaker trade has been offset by a construction boom, strong fiscal support and falling interest rates. (*see amendment note)

They added that several sectors – including retail, hospitality, property, bank lending and listing activity – showed signs of strengthening in the third quarter, which could help cushion the export downturn.

Despite the volatility in trade data, HSBC’s Asean economist Yun Liu said that high frequency indicators continue to point to resilient growth. She expects this year’s gross domestic product growth to hit 2.8 per cent and to provide the basis for the MAS to stand pat at the mid-October meeting.

An October easing?

Analysts from DBS and Fitch Solutions unit BMI, however, think the softer trade momentum could justify a modest easing in October. 

Both expect MAS to “slightly reduce” the slope of the policy band then.

DBS economists Chua Han Teng, Philip Wee and Eugene Leow noted that tariffs are weighing on non-oil domestic exports, particularly those bound for the US.

Earlier in the year, exports held up only because of front-loading, aided by the US tariff exemption on electronics and the artificial intelligence boom, they said.

And while manufacturing sentiment has stabilised, it remains below its early-2025 peak, they added. “Factories are still cautious amid an uncertain global landscape. Tariffs will test the resilience of manufacturing output in the coming months.”

BMI expects the MAS to ease policy both in October and once more in the first half of 2026, against a backdrop of slowing growth and headline inflation forecast at 1.5 per cent that year.

It also expects that a slight flattening of the S$NEER slope in October could pave the way for the Singapore dollar to ease to S$1.30 against the US dollar by year-end, from S$1.29 as at Oct 3. 

Meanwhile, Barclays economists Brian Tan and Liu Hongying expect the MAS to hold policy steady in October and January, then flatten the slope with a final round of easing in April.

They expect that trade-related drags – including US tariffs, post-front-loading payback and potential spillovers from a weakening US labour market – will eventually trigger clearer signs of a downturn in Singapore, prompting MAS to ease policy.

“However, much depends on the timing and depth of such a downturn,” said the Barclays economists, adding the signs would be more visible only by the April 2026 policy decision.

*Amendment note: A previous version of this story incorrectly stated MayBank economist Brian Lee’s name.