Singapore Central Bank Unexpectedly Holds Policy Steady

By Megan Cheah

SINGAPORE--Singapore's central bank unexpectedly held monetary policy steady after tightening twice this year, saying its existing settings would help curb inflation.

The Monetary Authority of Singapore said Wednesday that its policy would allow the Singapore dollar nominal effective exchange rate to keep strengthening, helping to counter an expected near-term rise in import prices and ease inflationary pressures in 2027.

The decision to stand pat was a surprise, as only one of 11 economists polled by The Wall Street Journal had expected the central bank to hold its settings steady. The other 10 had expected it to tighten policy.

The central bank is "well-positioned to respond effectively to any risk to medium-term price stability and will continue to closely monitor economic developments," it said.

The central bank had tightened policy twice this year by increasing the slope of its policy band, allowing the Singapore dollar to appreciate more quickly. The second adjustment in July was smaller than its first move in April, when the central bank tightened policy for the first time in more than three years.

"The Singapore economy should continue to expand at a firm pace in the immediate quarters ahead, and moderate thereafter as the AI cycle eases from its exceptional pace and global financial conditions tighten," it said.

While Singapore's economy is operating well above potential and core inflation is likely to rise further above its long-term average, the back-to-back tightening in April and July means that the MAS's monetary policy is likely seen as slightly restrictive, said ANZ Research's Khoon Goh in a note ahead of the decision.

"The 'very [slight]' increase in the slope of the policy band at the July [monetary policy statement] suggests that the MAS is wary of overtightening given the uncertainty in the external environment," said the head of Asia research.

The April move ended a policy pause that began after the MAS's last easing in July 2025. The central bank had loosened policy twice that year to support growth amid the threat of higher tariffs.

On Wednesday, the MAS said it will maintain the rate of appreciation of the Singapore dollar nominal effective exchange rate policy band. There will be no change to the width of the band and the level at which it is centered.

The MAS uses the exchange rate rather than interest rates as its main policy tool because Singapore's trade flows dwarf its domestic economic activity. The Singapore dollar is managed against an undisclosed basket of currencies belonging to the city-state's major trading partners and allowed to fluctuate within a policy band.

Write to Megan Cheah at megan.cheah@wsj.com

(END) Dow Jones Newswires

October 13, 2026 20:39 ET (00:39 GMT)