Singapore’s central bank kept its monetary policy unchanged on Monday as the economy showed signs of recovery in Q3. Analysts expect a policy loosening early next year to address external risks.
The Monetary Authority of Singapore (MAS) maintained its exchange rate policy band, the S$NEER, including its width and level.
MAS noted that inflation risks have balanced compared to three months ago, and economic growth is improving.
Recent data showed GDP grew by 4.1% year-on-year in Q3, helped by manufacturing, up from 2.9% in Q2. Outlook for 2025 looks positive, but geopolitical tensions pose risks.
OCBC economist Selena Ling mentioned potential for policy easing at the next review in January, citing concerns over maintaining tight monetary policy.
MAS expects growth in 2024 to land at the upper end of 2.0% to 3.0%, despite significant external uncertainties. The central bank highlighted that global trade tensions could affect investments and trade.
Singapore’s reliance on trade makes it a key indicator of global economic health. MAS forecasts core inflation to drop to around 2% by the end of 2024, down from a peak of 5.5% earlier this year.
Instead of adjusting interest rates, Singapore’s monetary policy focuses on managing its currency against a basket of other currencies.
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