Monetary Authority of Singapore Holds Policy Steady Against Expectations

The Monetary Authority of Singapore decided Wednesday to hold its monetary policy steady, leaving the slope, width, and centre of the Singapore dollar nominal effective exchange rate band unchanged. This decision keeps the currency on its current appreciating path to restrain imported inflation.

The move was a dovish surprise to the market, as all 10 analysts polled by Reuters had anticipated a policy tightening, likely through a steeper slope. The authority forecast that core inflation will average between 1.5% and 2.0% for 2026, with a more discernible easing expected to begin in mid-2027.

Because of Singapore's open economy and free capital flows, the central bank manages inflation by controlling the exchange rate of the Singapore dollar against a weighted basket of trading partners' currencies rather than using interest rates.