Singapore central bank expected to leave policy steady for third straight review By Reuters

© Reuters. The logo of the Monetary Authority of Singapore (MAS) is pictured at its building in Singapore in this February 21, 2013. REUTERS/Edgar Su/File Photo

By Xinghui Kok

SINGAPORE (Reuters) – Singapore’s central bank is widely expected to leave its monetary policy unchanged this month and hold off from easing its settings until it sees more evidence that inflation is falling consistently.

All 13 analysts polled by Reuters expect the Monetary Authority of Singapore (MAS) to hold off making changes to its policy in the scheduled review, which is due to be announced on Jan. 29.

“We do not believe this is the timing for MAS to loosen its monetary policy,” HSBC economists said in a research note.

“After all, MAS will need to see more evidence that inflation will consistently decelerate to its comfort zone before making the first easing move,” they said, expecting policy to be eased in April.

Inflation in the Asian financial hub remains sticky. It came in at 3.2% in November and 3.3% in December, inching down from a peak of 5.5% at the start of 2023.

The trade ministry and the central bank said in a joint statement in December that prices could remain volatile in the near-term thanks to an increase in a sales tax and swings in premiums paid for cars.

The government raised the goods and service tax (GST) to 9% from 8% at the start of 2024.

For 2024, core inflation is expected to be 2.5 to 3.5%, the trade ministry and central bank said on Tuesday.

“The recent additional 1% GST hike and other price adjustments … may mean somewhat stickier prices in the near-term,” OCBC chief economist Selena Ling said.

Major central banks are grappling with persistent inflation alongside a highly uncertain economic outlook, making them hesitant about moving too soon to relax monetary policy.

“Until they are convinced that inflation is on a sustained path to their targets, central banks want rates to stay elevated for an extended period, and will keep countering the market’s impatience in bringing forward rate cuts,” said DBS analysts.


Singapore is often seen as a bellwether for global growth as its international trade dwarfs its domestic economy.

Its economic growth plunged from 3.6% in 2022 to 1.2% in 2023. The trade ministry projects growth of 1% to 3% in 2024.

While the economy has shown some green shoots in what DBS economists call a “gradual yet fragile external-led recovery”, the global environment remains uncertain and challenging.

DBS economist Chua Han Teng said high interest rates in advanced economies, China’s uncertain outlook and geopolitical tensions were risk factors.

Singapore Prime Minister Lee Hsien Loong said in a New Year’s Day message that Israel’s war on Gaza, the war in Ukraine, tensions in the South China Sea and climate change will weigh on the global economy.

“For some years to come, we must expect the external environment to be less favourable to our security and prosperity,” he said.

The central bank left monetary policy unchanged in April and October last year, reflecting growth concerns, having tightened policy at five consecutive reviews prior to that.

Starting this year, MAS will make monetary policy announcements every quarter instead of semi-annually, citing a need to “enhance monetary policy communications”.

Instead of using interest rates, the central bank manages monetary policy by letting the local dollar rise or fall against the currencies of its main trading partners within an undisclosed band, known as the Singapore dollar Nominal Effective Exchange Rate, or S$NEER.

It adjusts policy via three levers: the slope, mid-point and width of the policy band.

The table below shows what economists at various institutions expect MAS to announce on Jan. 29.

UOB No changes

Bank of America No changes

Barclays No changes

OCBC No changes

DBS No changes

Goldman Sachs No changes

Deutsche Bank No changes

Fitch No changes

Oxford Economics No changes

HSBC No changes

Maybank No changes

Moody’s (NYSE:) No changes

MUFG No changes

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