Singapore Central Bank Holds Policy Steady, Trims Core Inflation Forecast
The central bank held its exchange-rate policy settings steady despite analyst expectations for tightening, while lowering its core inflation outlook.
Key takeaways
- MAS kept its policy band settings unchanged on Wednesday.
- MAS lowered its full-year core inflation forecast to 1.5% to 2%.
- Singapore's GDP grew 5.4% in the third quarter, according to the ministry.
Singapore’s central bank kept monetary policy unchanged on Wednesday, although all 10 analysts polled by Reuters had expected a tightening. The Monetary Authority of Singapore (MAS) also lowered its full-year core inflation forecast to 1.5% to 2%, from 1.5% to 2.5%.
MAS maintained the rate at which its policy band appreciates, while leaving the band’s width and midpoint unchanged. Singapore manages monetary policy through its exchange rate, allowing the currency to strengthen or weaken against the currencies of its main trading partners.
The central bank expects core inflation to remain slightly elevated in the coming quarters before easing. For 2027, it forecasts core and overall inflation of 1.5% to 2.5%, citing slower imported inflation and subdued domestic price pressures.
MAS said Singapore’s economy should continue expanding steadily in the coming quarters, supported by strong orders for artificial intelligence products and increased production capacity in technology-related sectors. The Ministry of Energy, Trade and Industry reported that GDP grew 5.4% in the third quarter.
The central bank expects growth to moderate as the AI boom cools from its exceptional pace. It also warned that a sustained rise in global energy or food prices could increase import costs and keep inflation risks tilted to the upside.
This article was produced with the help of AI technology. Based on reporting by the outlets listed above.
