Singapore Retains Monetary Policy As Expected

(RTTNews) - Singapore's central bank maintained its monetary policy, on Tuesday, as economic growth turned out to be stronger than expected, easing concerns about the impact of higher US tariffs.

The Monetary Authority of Singapore said it will maintain the prevailing rate of appreciation of the S$NEER policy band and there will be no change to its width and the level at which it is centered.

The bank had eased its policy twice this year. Instead of using interest rates, the MAS applies the exchange rate against a basket of currencies within an undisclosed band as its monetary policy tool.

The bank said it is in an appropriate position to respond effectively to any risk to medium-term price stability and will continue to closely monitor economic developments amid uncertainties in the external environment.

The MAS forecast core inflation to trough in the near term and rise gradually over the course of 2026 as temporary factors dampening inflation fade. Core inflation is expected to average around 0.5 percent this year and come in between 0.5 percent to 1.5 percent next year.

The bank expects the output gap to stay positive for 2025. In 2026, growth is projected to ease in line with external developments and narrows to around zero percent.

The city-state economy expanded at a slower pace of 2.9 percent in the third quarter after rising 4.5 percent in the preceding period, advance estimates from the Ministry of Trade and Industry showed today.

On a quarter-on-quarter basis, gross domestic product expanded 1.3 percent, slightly slower than the 1.5 percent growth posted in the second quarter.

ING economist Deepali Bhargava noted that the MAS is likely to maintain a cautious, data-dependent approach, offering limited forward guidance and remaining flexible to adjust policy in either direction.

She mentioned that there is still room to ease, especially with CPI inflation remaining modest within the target range next year. But any further policy adjustment will likely require clearer signs of economic weakness, the economist added.