MAS Holds Monetary Policy Steady as Strong Growth Raises Inflation Risks

The Monetary Authority of Singapore (MAS) has kept its monetary policy settings unchanged, in line with market expectations, while cautioning that robust economic growth could fuel inflationary pressures in the months ahead. In its latest policy statement released Thursday, MAS said it will maintain the current rate of appreciation for the Singapore dollar nominal effective exchange rate (S$NEER) policy band, along with leaving the width of the band and its central parity unchanged.

The decision reflects MAS’s assessment that Singapore’s economy remains resilient, supported by strong external demand and a recovery in key sectors such as semiconductor exports. Analysts had widely anticipated a policy hold, noting that while growth momentum has strengthened, inflation remains relatively contained for now.

However, MAS emphasized that risks to both growth and inflation are now skewed to the upside. The central bank warned that persistently stronger-than-expected gross domestic product (GDP) growth could translate into faster wage increases and improved consumer confidence. These factors, MAS noted, may intensify domestic demand and contribute to demand-pull inflation over time.

Recent economic data underscore the strength of Singapore’s recovery. Preliminary government figures released earlier this month showed that the economy expanded by 4.8% in 2025, outperforming the official forecast of around 4.0%. This stronger-than-expected GDP growth highlights the economy’s solid footing despite ongoing global uncertainties. Meanwhile, core inflation stood at 1.2% year-on-year in December, suggesting price pressures remain manageable but warrant close monitoring.

MAS’s exchange rate-based monetary policy framework focuses on managing the S$NEER rather than interest rates, making the policy band a key tool for controlling imported inflation and ensuring price stability. By keeping the policy settings steady, MAS is signaling confidence in the current stance while retaining flexibility to respond if inflationary risks intensify.

Looking ahead, the central bank reiterated that it will remain vigilant, closely tracking economic and inflation developments. If growth continues to surprise on the upside and feeds into higher inflation, MAS may consider policy adjustments to safeguard medium-term price stability. For now, the decision to hold reflects a balanced approach amid strong growth, stable inflation, and a cautiously optimistic economic outlook for Singapore.