On Monday, Singapore’s central bank decided to keep its monetary policy unchanged, as the economy showed improvement in the third quarter. Analysts expect a potential easing of policy next year due to external risks.
The Monetary Authority of Singapore (MAS) will maintain the current rate of appreciation for its currency policy band, the S$NEER.
MAS noted that risks to inflation are now more balanced than three months ago, and growth is on the rise.
Recent data revealed that Singapore’s GDP grew 4.1% year-on-year in the third quarter, boosted by manufacturing, up from 2.9% in the previous quarter. Economists feel optimistic about 2025 but acknowledge concerns over geopolitics and trade conflicts.
MAS forecasts GDP growth for 2024 to be between 2.0% and 3.0%, but warns that external risks could hinder this outlook, particularly from escalating trade tensions.
As a globally trade-dependent economy, Singapore’s approach to monetary policy involves adjusting its currency’s exchange rate rather than domestic interest rates, unlike most countries. MAS expects core inflation to drop to around 2% by the end of 2024.
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