Singapore to tighten monetary policy amid strong growth, rising inflation risks
SINGAPORE: Singapore is expected to tighten monetary policy at a scheduled review on Wednesday as robust growth and inflation risks bolster the case for another move.
Singapore is set to tighten its monetary policy during a scheduled review on October 14, according to all 10 analysts surveyed by Reuters. The Monetary Authority of Singapore (MAS) has previously surprised markets with a slight policy tightening in July and another in April. The Middle East conflict, with escalating tensions and a potential super El Niño, has raised concerns about rising inflation risks.
OCBC economist Selena Ling highlights the upside risk to core inflation due to the widening Middle East conflict and the potential for increased food costs. Barclays economist Brian Tan expects the central bank to raise the slope of its exchange rate policy band by approximately 25 basis points, driven by the AI boom and robust GDP growth.
However, the MAS may not be as aggressive in tightening policy as initially anticipated, given the milder-than-expected translation of economic growth to inflation. Current core and headline inflation rates are 2.2% and 2.3%, respectively, with the MAS forecasting core and headline inflation to average 1.5% to 2.5% for 2026.
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