The Monetary Authority of Singapore (MAS) is expected to adopt a zero percent appreciation stance in July 2025, following a slight easing in its April Monetary Policy Statement (MPS). According to UOB Global Economics and Markets Research, MAS announced a reduction in the slope of the Singapore dollar nominal effective exchange rate (S$NEER) policy band by an estimated 50 basis points to 0.5% per annum. This move was anticipated by economists, although calls for a complete slope flattening did not materialise.
The decision comes amidst concerns over Singapore’s economic outlook, heavily influenced by US-China trade relations. The Ministry of Trade and Industry (MTI) has revised its full-year GDP growth forecast for 2025 to 0.0-2.0%, down from a previous estimate of 1.0-3.0%. UOB has also adjusted its growth forecast to 1.5%, citing potential downside risks. The resident unemployment rate is projected to rise to around 4.0% in 2025, up from an average of 2.8% in 2024.
UOB’s Associate Economist, Jester Koh, noted that the thresholds for a zero percent appreciation stance have likely been met, drawing parallels to the April 2016 episode when MAS assessed core inflation and economic activity levels. “A complete slope flattening this year is not a matter of if but when,” Koh stated, anticipating the move in the upcoming July MPS.
The April MPS highlighted significant concerns over recent tariff developments, with MAS lowering its 2025 core inflation forecast to 0.5-1.5%. The statement emphasised the potential negative impact on Singapore’s trade-related sectors and broader economy, with the output gap expected to turn negative this year.
As Singapore navigates these economic challenges, the potential shift in MAS’s policy stance underscores the ongoing uncertainties in global trade and their implications for the nation’s economic trajectory.
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