The Monetary Authority of Singapore (MAS) will continue with its policy of a “modest and gradual appreciation” of the Singapore dollar nominal effective exchange rate (S$NEER) policy band.
However, the rate of appreciation will be reduced “slightly”, says MAS in its monetary policy statement (MPS) on April 14. There will be no change to the width of the band and the level at which it is centred.
This follows MAS’s January MPS, where the central bank reduced the slope of the S$NEER policy band “slightly” while keeping the policy band on a “modest and gradual appreciation path”. There was also no change to the width of the band or the level at which it was centred then.
This time, the decision to do so comes after Singapore’s key trading partners showed signs of weakening economic activity in 1Q2025, with prospects of global trade and GDP growth dimming in early April after the US’s tariffs.
“The external environment remains uncertain. There are downside risks to Singapore’s economic outlook stemming from episodes of financial market volatility and a sharper-than-expected fall in final demand abroad. A more abrupt or persistent weakening in global trade will have significant ramifications on Singapore’s trade-related sectors, and in turn, the broader economy,” says MAS.
As such, the government is expecting Singapore’s GDP growth to slow to 0% to 2% in 2025, from 4.4% in 2024.
MAS core inflation is also forecast to average 0.5% to 1.5% in 2025, down from 1.0% to 2.0% in the January MPS.
The downgrade reflects the lower-than-expected inflation prints in January to February as well as an expected moderation in the pace of price increases amid the weakening economic outlook.
Headline inflation, or CPI-All items inflation, is similarly expected to average between 0.5% to 1.5% in 2025, down from 1.5% to 2.5% previously.
