[SINGAPORE] The Republic’s central bank eased monetary policy settings slightly at its quarterly review on Monday (Apr 14), in a widely expected move after US tariffs raised recession fears, while also lowering its full-year inflation forecasts.
The Monetary Authority of Singapore (MAS) said the rate of appreciation will be reduced slightly for the Singapore dollar nominal effective exchange rate (S$NEER) policy band, with no change to the width of the band or the level at which it is centred.
This is as it continues with the policy of a modest and gradual appreciation, the central bank said.
The move was in line with market expectations, after US President Donald Trump announced a baseline 10 per cent import duty on all countries, and more extensive tariffs for the “worst offenders”.
“Prospects for global trade and gross domestic product growth dimmed in early April,” MAS said in the latest monetary policy statement.
On Monday morning, the Ministry of Trade and Industry downgraded Singapore’s GDP growth forecast for 2025 to between 0 and 2 per cent, from between 1 and 3 per cent previously.
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As Singapore is highly dependent on trade and deeply integrated with global supply chains, slowing global and regional trade could drag down its external-facing sectors, said MAS. This could spill over into domestic-oriented sectors.
“Consequently, the aggregate level of output will come in below the economy’s potential this year.”
Prime Minister Lawrence Wong warned on Apr 8 that the country may or may not face a recession this year, with economic growth “significantly impacted” by the US tariffs.
In a Bloomberg survey, all 14 economists forecast that MAS would reduce the S$NEER slope. Meanwhile, nine out of 10 analysts polled by Reuters expected this move.
The latest loosening follows a previous round of easing in January, when MAS also reduced the slope slightly. Prior to that meeting, the central bank stood pat for more than two years, last tightening policy in October 2022.
At the April meeting, MAS lowered its official full-year forecast ranges for Singapore’s inflation. It now expects core inflation to come in between 0.5 and 1.5 per cent, down from 1 to 2 per cent previously. Headline inflation is now similarly expected to average between 0.5 and 1.5 per cent, down from 1.5 to 2.5 per cent before.
With the output gap turning negative, Singapore’s imported and domestic cost pressures will remain low, MAS said, adding that risks to inflation are tilted towards the downside.
