SINGAPORE, April 14 — Singapore’s central bank tightened monetary policy today and raised its inflation outlook for 2026, citing rising uncertainty linked to the Middle East conflict and its impact on global energy supply.
According to Channel NewsAsia, the Monetary Authority of Singapore (MAS) said it would “increase slightly” the rate of appreciation of the Singapore dollar nominal effective exchange rate (S$NEER) policy band, while keeping its width and midpoint unchanged.
The move allows the Singapore dollar to strengthen at a faster pace, helping to ease imported inflation by making foreign goods cheaper.
MAS said it remains ready to respond to risks to medium-term price stability and will continue monitoring global developments closely, adding that it stands prepared to manage excessive volatility in the exchange rate.
The central bank also revised its inflation forecasts upward, now expecting both core and headline inflation to come in at 1.5 to 2.5 per cent in 2026, up from the earlier 1 to 2 per cent range. Core inflation excludes accommodation and private transport costs.
This marks the second upward revision this year, after MAS had already raised its forecast in January. In October last year, it had projected a lower range of 0.5 to 1.5 per cent.
Economists had largely anticipated the tightening move, with some already adjusting their own inflation projections higher and expecting further policy action.
Unlike many central banks, MAS manages monetary policy through the exchange rate rather than interest rates, allowing the Singapore dollar to move within an undisclosed band against a basket of currencies.
The authority last tightened policy in October 2022 and has kept its stance unchanged since April last year.
MAS warned that imported energy costs have already risen and that broader price pressures are likely to build in the coming months. Even if supply from the Middle East recovers, prices are expected to remain elevated due to delayed deliveries and efforts by countries to rebuild reserves.
Rising costs are also expected to feed into intermediate and consumer goods, although slower rental growth may help keep accommodation inflation in check.
On growth, MAS said higher inflation and weaker external demand are likely to weigh on Singapore’s economy. It noted that the situation in the Middle East remains fluid, and GDP growth in 2026 is expected to moderate from the stronger pace recorded last year.
Advance estimates showed Singapore’s economy grew 4.6 per cent in the first quarter, down from 5.7 per cent in the previous quarter, while contracting 0.3 per cent on a quarter-on-quarter seasonally adjusted basis.
MAS said prolonged disruptions to energy supply could intensify global inflationary pressures and further dampen growth, while tighter financial conditions or a slowdown in artificial intelligence-related investment could add to downside risks.
Still, it expects some resilience from advanced economies and continued investment in artificial intelligence, alongside domestic support from public infrastructure and housing projects.
