Singapore Central Bank Softens Monetary Policy

(RTTNews) - Singapore's central bank eased its monetary policy for the second time as inflation remained low, while downside risks to growth outlook increased due to the lack of clarity over policies of the US administration and trade frictions.

The Monetary Authority of Singapore said it will continue with the policy of a modest and gradual appreciation of the S$NEER policy band.

However, the rate of appreciation will be reduced slightly. There will be no change to the width of the band and the level at which it is centered, the bank added.

The MAS applies the exchange rate against a basket of currencies within an undisclosed band as its monetary policy tool. Previously, the bank had tightened its policy in January.

The bank said the aggregate level of output will come in below the potential this year due to high trade dependency and deep integration with global supply chains, slowing global and regional trade and heightened policy uncertainty.

Imported and domestic cost pressures will remain low and core inflation is set to stay well below 2 percent, the bank noted.

Overall inflation outlook for this year was downgraded to 0.5-1.5 percent from 1.5-2.5 percent. Likewise, core inflation is forecast to average 0.5-1.5 percent in 2025, down from the previous projection of 1.0-2.0 percent.

Elsewhere, data from the Ministry of Trade and Industry showed that the city-state economy logged a slower growth in the first quarter. Gross domestic product grew 3.8 percent on a yearly basis, following the prior quarter's 5.0 percent expansion.

On a quarter-on-quarter basis, the economy contracted by adjusted 0.8 percent, which reversed the 0.5 percent expansion in the fourth quarter.

The ministry today downgraded its growth forecast for 2025 to 0.0 to 2.0 percent from 1.0 to 3.0 percent.

With the economy set to grow below trend, inflation is likely to remain low and give the central bank room to ease monetary policy further in July, Capital Economics economist Shivaan Tandon said.