The Monetary Authority of Singapore (MAS) has eased its monetary policy for the first time in nearly five years, anticipating slower economic growth and subdued inflation in 2025. In its January policy statement, MAS announced a slight reduction in the slope of the Singapore dollar nominal effective exchange rate (S$NEER) policy band while keeping its width and mid-point unchanged.

This adjustment aligns with a gradual appreciation path for the Singapore dollar to maintain medium-term price stability. The central bank also lowered its core inflation forecast for 2025 to a range of 1 to 2 percent, down from the previous estimate of 1.5 to 2.5 percent, citing a faster-than-expected moderation in inflation. Headline inflation remains projected at 1.5 to 2.5 percent.

MAS noted that business cost pressures are contained, with global oil prices expected to decline and key food commodity supplies remaining stable. Government subsidies are also expected to ease inflation in essential services like healthcare, education, and public transport.

On the economic front, Singapore’s growth is projected to moderate to 1 to 3 percent in 2025, down from 4 percent last year, amid rising global policy uncertainties and trade frictions. The central bank reaffirmed its commitment to closely monitoring inflation and growth risks while maintaining a flexible approach to monetary policy.

This move marks MAS’s first policy easing since March 2020, when it acted to counter the economic fallout from the COVID-19 pandemic.

Source: Channel News Asia
Photo: MAS