Surprise MAS hold signals core inflation near peak; economists see longer pause in policy tightening
A narrower forecast points to stabilising prices, though HSBC and UOB flag a January risk
The Monetary Authority of Singapore (MAS) surprised markets by deciding to hold monetary policy rates on October 14, indicating that core inflation may be nearing its peak. Most economists expected a tighter policy stance, with only 3 of 20 predicting a holding. MAS maintained its S$NEER policy band, leaving no change to its width or center.
The central bank reduced its 2026 core inflation forecast to 1.5 to 2 percent from 1.5 to 2.5 percent, forecasting headline inflation around 2 percent. Core inflation rose to 2.1 percent in July and August, and MAS believes it will ease from mid-2027. Economists from Maybank, OCBC, and DBS view the decision as a pause in policy tightening, expecting MAS to hold until January 2027, given the narrowing output gap and easing core inflation.
However, HSBC economist Yin Liu remains cautious, noting that imported inflationary pressures, such as energy costs from Middle East tensions and a December public transport fare hike, could still cause inflation to peak at 2.5 percent in January and average 2.1 to 2.2 percent in 2027.
Written by urgent.news from The Business Times - Singapore's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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