Singapore: Policy slope tightening view – DBS

DBS Group Research anticipates that the Monetary Authority of Singapore will slightly raise the SGD NEER policy band slope at their October review, while maintaining the band's width and center. The team, led by Taimur Baig, predicts a measured tightening fueled by import cost pressures, resilient growth, and a strong Q3 2026 GDP, driven by AI-led trade and a robust financial sector.

Import cost pressures and resilient growth suggest a calibrated tightening, rather than a more aggressive adjustment, aligning with global monetary policy trends. Additional 3Q26 advance GDP estimates, released alongside the MAS' policy decision, are expected to reflect another quarter of strong growth at 5.4% year-over-year (1.4% quarter-over-quarter), compared to 5.9% yoy (1.4% qoq) in 2Q26.

Economic strength continues to be bolstered by AI-driven trade activity, particularly in manufacturing and wholesale trade, as well as the financial sector's resilience. However, moderating transport & storage, food services, and retail sectors have tempered growth. The DBS research team expects another minor increase in the SGD NEER policy band slope at the October review, with no modifications to the band's dimensions.