(Jan 28): Singapore’s central bank is expected to hold policy settings steady for a third straight review, though economists see scope for a hawkish pivot as inflation shows signs of gaining momentum.
Nineteen out of 20 economists in a Bloomberg survey forecast the Monetary Authority of Singapore (MAS) will maintain its policy settings on Thursday. Bank of America Corp (BofA) is alone in predicting a tightening this week. United Overseas Bank Ltd reckons a “preemptive” move cannot be ruled out, while Nomura Holdings Inc sees the meeting as “live”.
Nine of the 13 survey respondents also expect a hawkish bias in the statement, with four predicting no change to the tone.
The MAS, which holds four policy reviews per year, had left its setting unchanged since last easing in April 2025 to help support growth. Unlike most central banks, which use interest rates, Singapore seeks to maintain medium-term price stability by managing its dollar’s trade-weighted appreciation within a target band.
“The debate is between now or April,” said Nomura’s Sonal Varma, ascribing a 30% probability of a slight increase to the policy slope on Thursday. “Growth has surprised on the upside and is expected to remain strong in the first half. Nominal wage growth is strong, unit labour costs are picking up, and we are forecasting core inflation to average 2.1% in 2026.”
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Thursday’s decision follows inflation data for December which showed consumer prices remained elevated for a third straight month, driven by healthcare, education and food. The figures suggest that price “momentum is picking up”, said Selena Ling, the chief economist of Oversea-Chinese Banking Corp Ltd.
“Looking ahead, the official rhetoric may be beginning to tilt from a neutral balanced stance to a slightly more hawkish tone,” she added.
The MAS will update its forecast ranges for 2026 core and all-items inflation at the review on Thursday. Both gauges are projected to rise in 2026 from their low rates last year, the central bank said in a statement last week.
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That “rare heads-up” prompted economists at BofA to switch their call to now predict a 50-basis-point steepening of the policy slope on Thursday, economists Kai Wei Ang and Rahul Bajoria wrote in a note.
The MAS review comes as central banks globally adopt divergent paths — emerging Asian economies are expected to lower borrowing costs, Japan, Canada and Australia are seen hiking, while the eurozone will likely leave rates unchanged. The US Federal Reserve, meanwhile, may ease settings further.
However, as with 2025, geopolitics and US trade policies may easily jolt the outlook as central banks feel their way through the economic fog stoked by US President Donald Trump’s second year at the White House.
Singapore is due to unveil its 2026 budget on Feb 12, with economists expecting a conservative fiscal stance after the economy’s strong performance last quarter and emerging signs of inflation.
Gross domestic product in the final three months of 2025 expended 5.7% from the same period a year ago, boosted by pharmaceutical and electronic manufacturers, while consumer spending was strong too.
That, together with regional safe-haven demand, has boosted the Singapore dollar about 6% over the last 12 months to the highest since 2014. The benchmark Straits Times Index is trading at a record high.
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As a result, the MAS will sound “more positive on the outlook, acknowledging that risks to inflation are tilting to the upside”, said Khoon Goh, an economist at ANZ Banking Group Ltd. He doesn’t expect the central bank to turn “outright hawkish” yet.
“While the MAS core inflation is forecast to rise, it is still far from the de facto target of 2%. Hence the MAS can afford to be patient,” Goh said. “We maintain our call for a tightening in July.”
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