Singapore’s MAS Unexpectedly Holds Policy Steady, Citing Lower Inflation Outlook
| Pair | Now | Since publish |
|---|---|---|
| USDSGD | — | — |
- MAS holds policy steady, surprising 10 analysts; SGD dips.
- Policy band appreciation maintained, signaling pause after two tightenings.
- MAS sees inflation easing mid-2027, above 2% until 1H 2027.
- Strong Q3 GDP (5.4%) beats consensus; AI cycle cools.
The Monetary Authority of Singapore (MAS) unexpectedly kept its monetary policy unchanged, surprising all 10 analysts who had anticipated a tightening move. This decision, driven by a lowered 2026 inflation forecast and expectations for an easing global energy crunch and AI boom, initially left the Singapore dollar vulnerable as hawkish positions unwound. Despite the hold, the MAS maintained an appreciating slope for its policy band, signaling a pause rather than an end to its tightening cycle. Analysts note that strong Singapore economic growth, with Q3 GDP expanding 5.4% year-on-year, and lingering upside inflation risks, particularly from imported energy costs, could prompt future tightening. A renewed surge in crude prices, potentially from Gulf escalation, is identified as a key trigger for the MAS to steepen its policy band again.
The Monetary Authority of Singapore (MAS) unexpectedly kept its monetary policy unchanged, maintaining the rate of appreciation of its policy band and leaving the width and center of the band unchanged. This decision followed two consecutive policy tightenings. The move comes despite Singapore’s Q3 Gross Domestic Product (GDP) growing by a stronger-than-expected 5.4% year-on-year. MAS indicated that this is a pause in its tightening cycle rather than a shift towards easing.
New analysis from MUFG indicates that MAS anticipates core inflation to ease from mid-2027, with expectations for it to remain slightly above 2% until 1H 2027. This outlook is attributed to subdued domestic costs and a narrowing output gap as the AI cycle cools. MAS also expects AI-related demand to support near-term growth. Singapore’s Q3 GDP growth of 5.4% year-on-year, which beat the 5.1% market consensus, moderated from an upwardly revised 6.2% year-on-year in Q2.