As price pressures show signs of easing, policymakers are assessing the impact of new U.S. tariff policies on the global economy. In response, the Monetary Authority of Singapore (MAS) has further relaxed its monetary policy.
The MAS announced that the Singapore dollar will appreciate at a slightly slower pace, while the width and midpoint of the exchange rate band will remain unchanged. Singapore uses the exchange rate, rather than interest rates, as its main policy tool.
The MAS emphasized its vigilance regarding global and domestic economic conditions, as well as the risks to inflation and economic growth. All 14 economists surveyed expected the MAS to adjust the slope of the exchange rate band. This marks the second policy easing by MAS since January, the first since 2020.
Additionally, Singapore has revised its 2025 economic growth forecast down from 1-3% to 0-2%. Recent data showed the economy grew by 3.8% year-on-year in the first quarter, below the expected 4.5% growth.
The MAS highlighted the persistent uncertainty in the external environment, with downside risks to Singapore's economic outlook stemming from financial market volatility and weaker-than-expected overseas demand. Following the policy announcement, the Singapore dollar saw a slight increase.
