- MAS tightens monetary policy for the second time in a row.
- MAS core inflation, which excludes accommodation and private transport, is projected to pick up from July and remain elevated into early next year.
Singapore's Monetary Authority (MAS) has tightened its monetary policy for the second time in a row, surprising many analysts who anticipated no change. The MAS's decision comes as core inflation is projected to rise and remain elevated into early next year, reflecting ongoing economic pressures.
In its latest monetary policy statement, the MAS indicated that it would increase the rate of appreciation of the policy band slightly, although the adjustment is smaller than the one made in April. This move aims to address rising inflation expectations, which have been influenced by various factors, including global energy prices.
According to a Reuters poll of 16 analysts, 12 expected the MAS to maintain its current policy, while four anticipated tightening measures. This divergence highlights the uncertainty surrounding economic conditions, particularly in light of recent geopolitical events affecting energy prices.
Economists from Standard Chartered Bank Singapore noted, “On balance, we still expect the MAS to keep monetary policy unchanged in October, albeit with risks tilted towards further tightening.” The MAS has also raised its inflation forecast for 2026 to between 1.5% and 2.5%, indicating a long-term concern about inflationary pressures.
As Singapore navigates these economic challenges, the MAS's proactive measures reflect a commitment to stabilizing the economy amidst fluctuating inflation expectations and external uncertainties.
“The Monetary Authority of Singapore (MAS) has tightened monetary policy again, indicating a response to rising inflation pressures. Core inflation, which excludes accommodation and private transport, is expected to increase from July and stay high into early next year, reflecting ongoing economic challenges.”
