Singapore keeps monetary policy unchanged amid inflation risks

The Monetary Authority of Singapore (MAS) expects to keep monetary policy on hold this week and delay easing as geopolitical tensions pose continued risks to the inflation outlook.

Analysts generally predict that MAS will not change its policy stance at its regular policy review this Friday. Lloyd Chan, senior currency analyst at MUFG Global Markets Research, noted that core inflation remains above the MAS' 2% target, so the MAS may be in no rush to ease policy.

MAS general manager Chia Der Jiun said last week that he foresees core inflation to continue to moderate and fall significantly by the end of the year.

When releasing the MAS annual report, Chia further said that unless there is a new shock, the inflation rate in 2025 is expected to be close to 2%. He also predicted that Singapore's full-year economic growth would be close to the potential growth range of 2% to 3%, which is at the high end of the Ministry of Trade's forecast range of 1% to 3%.

Looking around the world, central banks around the world have begun to gradually cut interest rates. The European Central Bank chose to keep interest rates unchanged this month after cutting interest rates for the first time in June, while the Federal Reserve hinted that it may make its first interest rate cut in September.