Singapore leaves monetary policy settings unchanged in July
Full-year core and headline inflation forecasts remain unchanged at 0.5 to 1.5%
[SINGAPORE] The Republic’s central bank kept monetary policy settings unchanged in Wednesday’s (Jul 30) quarterly policy meeting, after two consecutive quarters of easing.
The Monetary Authority of Singapore (MAS) said it will maintain the prevailing rate of appreciation of the Singapore dollar nominal effective exchange rate (S$NEER) policy band, with no change to its width and the level at which it is centred.
“MAS had eased monetary policy twice earlier this year, and is in an appropriate position to respond to risks to medium-term price stability,” said the central bank.
Since its April review where the band’s slope was reduced slightly, the S$NEER has strengthened toward the top of the policy band amid broad-based depreciation in the US dollar, it said.
Private-sector economists’ expectations of the move had been split. In a Bloomberg poll, 14 of 19 economists thought settings would be unchanged, with the rest expecting continued easing through a slope reduction.
Of 16 economists polled by the Wall Street Journal, nine thought MAS would keep its settings, while seven forecast easing. Similarly, in a Reuters’ survey of 12 analysts, half thought the MAS would hold steady, while the other half predicted easing.
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Uncertain outlook
As for full-year 2025 inflation, MAS maintained its forecasts for both core and headline inflation at 0.5 to 1.5 per cent.
Overall, the pace of consumer price increases was subdued in the previous quarter, it said, attributing this to “modest imported and domestic cost pressures, as well as weak consumer spending for some CPI (consumer price index) components”.
MAS said that inflationary pressures should remain contained in the near term, with ample global oil supplies and falling producer prices regionally on the external front, and lower nominal wage growth and continuing labour productivity gains domestically.
This is even as it noted that core inflation is projected to edge up slightly from the later part of 2025, on the tapering of the disinflationary impact of enhanced healthcare subsidies introduced late last year and the global oil price decline.
Singapore’s gross domestic product is expected to grow 4.3 per cent in Q2, based on advance estimates released earlier in July. The full-year growth forecast is 0 to 2 per cent.
In that release, the Ministry of Trade and Industry said that there “remains significant uncertainty and downside risks in the global economy” in the second half, given the US’ unclear tariff policies.
On Wednesday, MAS said that since April’s meeting, global growth has been more resilient than expected. Manufacturing production and trade have remained steady on the back of front-loading and continued artificial intelligence-related investments.
“Over the rest of the year, growth momentum should moderate as front-loading activity dissipates, while the drags on demand exerted by policy uncertainty intensify, and previously delayed tariffs are implemented,” it warned.
Still, the risk of a sharp step-down in global growth in the near term has receded, with the general de-escalation in trade tensions and more benign financial conditions since April, it added.
Singapore’s GDP growth is expected to slow in H2, with output falling slightly below potential, but the output gap is projected to average around 0 per cent for the full year, said MAS.
“Given the uncertainties, MAS will closely monitor global and economic developments, and remain vigilant to risks to inflation and growth.”
The latest decision follows two rounds of easing in January and April, when MAS reduced the policy slope slightly. Prior to that, the central bank stood pat for more than two years, last tightening policy in October 2022.
Singapore’s core inflation, which excludes accommodation and private transport, held steady at 0.6 per cent in June. Headline inflation similarly remained unchanged at 0.8 per cent.
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