The Monetary Authority of Singapore, which uses the exchange rate as its main tool rather than interest rates, raised the rate of appreciation of its policy band “very slightly,” it said. It left the width and centre unchanged.
Four out of 18 analysts in a Bloomberg survey had expected the move, while one called for a re-centring. The remaining 13 predicted no change to monetary policy settings.
“In an environment of continued heightened uncertainty, this calibrated adjustment to the policy stance builds on the tightening in April,” the central bank said in a statement, adding that it “stands ready to curb excessive volatility” in its policy band.
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The Singapore dollar was up 0.15% to 1.2886 versus the greenback following the announcement. The local dollar has been the top-performing currency in Southeast Asia against the US dollar since the outbreak of the war in the Middle East.
Policymakers have been weighing the impact of the US-Iran conflict on the trade-reliant city-state, including inflation-fuelling higher oil prices and the risks of a global economic slowdown.
While core inflation has been relatively tame, coming in at 1.6% last month, the central bank said it will likely pick up from July and remain elevated. It kept its forecast for core inflation at 1.5%-2.5% for this year. Price risks will likely moderate discernibly from around mid-2027, it said.
“External price pressures are expected to persist and pass through more broadly to domestic consumer prices in the period ahead,” MAS said.
The boost from the artificial intelligence boom should continue to drive Singapore’s economic growth. It expanded 5.7% last quarter, putting it on track to beat the government’s latest full-year projection of 2%-4%.
“The economy’s positive output gap is now forecast to widen slightly in 2026, reflecting the above-trend growth outturns in the first half of the year, as well as the expectation that overall GDP will be sustained at high levels in the near term,” MAS said.