Singapore: Central Bank maintains policy stance in January
MAS leaves monetary policy unchanged: At its meeting on 29 January, the Monetary Authority of Singapore (MAS) decided to maintain the prevailing rate of appreciation of the Singapore dollar nominal effective exchange rate (S$NEER) policy band, with no changes to its width or the level at which it was centered. The decision was in line with market expectations.
Higher inflation and stronger economic growth underpin hold: The decision of the MAS reflected stronger price pressures at the end of 2025 and expectations of higher core inflation ahead; core inflation rose to 1.2% in Q4 from 0.4% in Q3, driven by higher private health costs, holiday expenses and the dissipation of base effects associated with increased subsidies. The MAS raised its projections for headline and core inflation in 2026 to 1.0–2.0% from 0.5–1.5% in October.
Meanwhile, the MAS highlighted a stronger-than-expected economic performance in Q4, with the output gap expected to remain positive but gradually narrow over the course of 2026. The Bank also expects strong GDP growth in 2026 but acknowledges that global market uncertainty or a reduction in AI investment could pose headwinds.
Monetary policy tightening likely this year: The MAS did not provide specific forward guidance on future monetary policy decisions, but a majority of our panelists anticipate a tightening of FX policy this year: some expect it as early as April 2026, while others see it in H2 2026, once additional data allows for a revision of the inflation outlook.
Panelist insight: Nomura analysts commented:
“We believe the MAS may tighten FX policy in coming months, based on the MAS’ relatively positive macro outlook, owing to current positive growth momentum, the pick up in core inflation, and strong nominal wage growth. A tightening is more likely in April 2026 (i.e., increase S$NEER slope), if upcoming data for Q1 2026 confirm a sanguine growth outlook and rising local core inflation.”
Goldman Sachs analysts said:
“In our view, MAS wants clearer evidence of a sustained firming in core inflation momentum before normalizing policy settings. By the April meeting, there may not be enough new data to warrant another upgrade to the core inflation outlook. We therefore maintain our expectation that MAS will increase the slope of appreciation of the SGD NEER policy band to 1.0% per annum at the July meeting.”