SINGAPORE: The Monetary Authority of Singapore (MAS) has moved to loosen its monetary policy for the first time in nearly five years, amid expectations for slower growth and easing inflation in the year ahead.
In its January monetary policy statement released on Friday (Jan 24), the central bank said it will “reduce slightly” the slope of the Singapore dollar nominal effective exchange rate (S$NEER) policy band.
The width of the policy band and the level at which it is centred remained unchanged.
“This measured adjustment is consistent with a modest and gradual appreciation path of the S$NEER policy band that will ensure medium-term price stability,” the statement said, adding that it expects Singapore’s growth momentum to slow this year.
“MAS will closely monitor global and domestic economic developments, and remain vigilant to risks to inflation and growth.”
The central bank also lowered its forecasts for core inflation this year, noting that the key gauge for consumer prices has “moderated more quickly than expected and will remain below 2 per cent this year”.
Core inflation, which strips out private transport and accommodation costs, is expected to average between 1 and 2 per cent in 2025, down from an initial forecast of 1.5 to 2.5 per cent.
The revision comes a day after data showed core inflation touching a more than three-year low in December 2024. At 1.8 per cent, it was slightly lower than the 1.9 per cent in November.
In its statement, it said business cost- and demand-driven inflationary pressures are expected to remain contained. Imported costs should stay “moderate” on the back of expectations for global oil prices to decline and favourable conditions in key food commodity supplies.
“While an escalation of trade frictions could be inflationary for some economies, their impact on Singapore’s import prices is likely to be offset by the disinflationary drags exerted by weaker global demand,” it added.
Domestically, it expects consumer price inflation for essential services, such as public healthcare, pre-school education and public transport, to be “dampened by additional government subsidies”.
MAS kept its headline inflation for 2025 unchanged at a forecast range of 1.5 to 2.5 per cent, as accommodation inflation is “forecast to slow, partly offsetting an anticipated pickup in private transport inflation”.
