Singapore is widely expected to leave its monetary policy settings unchanged at a review on Thursday, with stronger-than-expected economic growth and subdued inflation reducing pressure for near-term action.
Out of 16 analysts polled by Reuters, 15 expect the Monetary Authority of Singapore (MAS) to maintain its current stance. MAS last held policy steady in July and October after easing in January and April last year.
Economic momentum has been supported by robust semiconductor demand. Singapore’s gross domestic product expanded 4.8% in 2025, beating the government’s November forecast of around 4.0% and its earlier estimate of between 1.5% and 2.5%.
The electronics purchasing managers’ index stood at 50.9 in December, indicating continued expansion in the tech cycle. Economist Intelligence Unit Asia analyst Tay Qi Hang said AI-related demand and rising memory chip prices should continue to support the semiconductor sector in the coming months.
“The fourth quarter 2025 growth outperformance, coupled with stable core inflation at just above 1% in November, has reduced near-term pressure to ease,” he said.
Standard Chartered chief economist Edward Lee said there was no urgency for MAS to act at this week’s review given inflation remains under control. However, he expects MAS to tighten policy in April as the inflation cycle bottoms out and trade uncertainties ease.
In contrast, Bank of America economists said MAS could tighten policy as early as this week following December data that pointed to strengthening inflation pressures. They said MAS may raise its 2026 core inflation forecast range by 50 basis points to between 1% and 2%, from the current 0.5% to 1.5%.
According to the economists, higher prices for travel-related and other components more than offset declines in raw food and beverage prices.
MAS manages monetary policy by allowing the Singapore dollar to trade within an undisclosed band against a basket of currencies of its major trading partners, known as the Singapore dollar nominal effective exchange rate. Policy adjustments are made through changes to the slope, midpoint and width of the band.
Globally, major central banks are expected to hold rates steady in the near term, although uncertainty surrounding the US Federal Reserve’s independence remains a concern for financial markets.
Source: businesstoday