Singapore’s Central Bank Faces Split Predictions Ahead of Policy Review

Economists remain divided on whether the Monetary Authority of Singapore (MAS) will ease monetary policy at its upcoming review or maintain current settings. A Reuters poll of 12 analysts revealed an even split: six predict MAS will loosen its currency-based policy, while the other half expect no change.

Singapore's inflation and robust 2024 economic growth at 4% have fueled speculation. MAS has held policy steady since a tightening in October 2022, the fifth consecutive adjustment then, citing broader growth concerns. The central bank last eased in March 2020 during the global COVID-19 downturn.

MAS manages policy via the Singapore dollar nominal effective exchange rate (S$NEER), adjusting its slope, midpoint, and band width. Maybank economist Chua Hak Bin expects a gentler appreciation in the slope due to a softer inflation outlook. Core and headline inflation, now below 2% from a 5.5% peak in early 2023, are forecasted to decline further in 2025.

Bank of America analysts predict no immediate changes but anticipate easing in April when global cost trends and Singapore’s budget impact become clearer. Standard Chartered economist Jonathan Koh and BMI’s Lee Yen Nee suggest MAS will likely hold policy steady to assess potential ripple effects from U.S. President Donald Trump’s second-term policies, which may influence inflation.

Globally, central banks favor cautious adjustments. While the Federal Reserve recently cut rates, it is expected to hold policy amid inflation concerns. Similarly, the European Central Bank has adopted a measured approach to further reductions.

As a trade-dependent economy, Singapore’s GDP forecast for 2025 stands at 1.0%-3.0%. MAS’s decision will signal its outlook amid global uncertainties.