Singapore's MAS Expected to Maintain Steady Policy Amid Mild Inflation

Singapore is expected to leave its monetary policy unchanged at the upcoming review on July 27, according to a Reuters poll. Out of 16 analysts surveyed, 12 anticipate that the Monetary Authority of Singapore (MAS) will maintain its current stance, citing manageable inflation levels despite pressures from rising energy costs linked to ongoing tensions in the Middle East.

Core inflation is currently running below the upper limit of the official target range of 1.5% to 2.5% for 2026. The majority view suggests that the MAS will keep the Singapore dollar nominal effective exchange rate (SGD NEER) unchanged, which is crucial for the currency's stability. A surprise tightening, however, could lead to a steeper SGD NEER slope, potentially supporting the currency.

The recent GDP growth figure of 5.7% for the second quarter has prompted some analysts to consider the possibility of tightening, but the overall sentiment remains cautious. Analysts note that the pass-through effects of rising energy costs have been milder than expected, indicating that a significant oil shock would be necessary to prompt a re-centering of the SGD NEER band.

The MAS had previously tightened its policy in April 2026 after holding steady at its prior three meetings. The current economic backdrop includes heightened regional conflict, particularly with Houthi forces imposing a naval blockade on Saudi Arabia, which could further strain global energy supplies. However, economists like Qi Hang Tay from the Economist Intelligence Unit expect the MAS to hold its position, emphasizing the subdued nature of core inflation and the limited impact of energy cost increases thus far.

As authorities continue to monitor potential disruptions from El Niño-related weather patterns, which could affect food inflation, the consensus remains that the MAS will prioritize stability in its monetary policy during the upcoming review.