Singapore central bank keeps monetary policy unchanged — Channel NewsAsia

The Monetary Authority of Singapore (MAS) left monetary policy unchanged on October 14, although all 10 analysts surveyed by Reuters had expected it to be tightened. The regulator also narrowed its core inflation forecast to 1.5–2% from the previous range of 1.5–2.5%, Channel NewsAsia reports.

Exchange-rate corridor parameters

MAS will maintain the pace of appreciation of the exchange-rate corridor it uses to conduct monetary policy. At the same time, the regulator will change neither the width of the corridor nor the level around which it is centered.

MAS said that the current appreciating corridor would allow the nominal effective exchange rate of the Singapore dollar to curb the expected near-term rise in imported inflation. In the regulator’s view, this should ensure a gradual easing of inflationary pressure in 2027.

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Economic outlook

The central bank expects Singapore’s economy to grow at a solid pace in the coming quarters and then slow as the exceptionally rapid artificial intelligence boom weakens. According to MAS forecasts, core inflation will decline noticeably from the middle of next year.

Unlike many other central banks, MAS conducts monetary policy primarily through the exchange rate rather than interest rates. The regulator allows the Singapore dollar to appreciate or depreciate against the currencies of its main trading partners within an undisclosed corridor. In April and July, MAS raised the pace of appreciation of this corridor twice, with the July increase being smaller than the April one.