Singapore Eases Monetary Policy Again Amid Low Inflation, Slowing Growth

Singapore’s central bank eased its monetary policy for the second time this year, citing persistent low inflation and growing downside risks to economic growth amid global uncertainties and trade tensions.

The Monetary Authority of Singapore (MAS) announced it will maintain its current policy stance of a modest and gradual appreciation of the Singapore dollar nominal effective exchange rate (S$NEER) band. However, it will slightly reduce the rate of appreciation. The width and mid-point of the band remain unchanged.

Unlike many central banks, MAS uses the exchange rate as its primary monetary policy tool, guiding the Singapore dollar against a trade-weighted basket of currencies within an undisclosed policy band. The last tightening move occurred in January.

In its statement, MAS highlighted that Singapore’s output will remain below potential this year, impacted by weak global and regional trade, heavy reliance on global supply chains, and lingering uncertainty over U.S. trade and economic policies.

Inflationary pressures remain subdued. MAS now expects overall inflation to average 0.5% to 1.5% in 2025, down from an earlier forecast of 1.5% to 2.5%. Core inflation, which excludes private transport and accommodation, is projected at 0.5% to 1.5%, compared to the previous range of 1.0% to 2.0%.

Supporting the policy shift, data from the Ministry of Trade and Industry showed a slowdown in economic growth. GDP grew 3.8% year-on-year in the first quarter, down from 5.0% in Q4 2024. On a quarter-on-quarter basis, the economy contracted by 0.8%, reversing a 0.5% expansion.

The ministry also downgraded Singapore’s 2025 growth outlook to a range of 0.0% to 2.0%, from the previous 1.0% to 3.0% forecast.

With inflation expected to remain well below 2%, Capital Economics economist Shivaan Tandon said MAS is likely to have more room to ease policy again at its next meeting in July.