Morgan Stanley Research has forecasted that the Monetary Authority of Singapore (MAS) will likely tighten its policy in April, reverting to a “modest and gradual” appreciation path. This prediction is based on the MAS’s assessment of a positive output gap for the second consecutive year and normalising price pressures.
In its January meeting, the MAS maintained all parameters of its Singapore Dollar Nominal Effective Exchange Rate (S$NEER) policy. However, it raised its 2026 inflation projections to 1-2% and noted that the output gap would remain positive throughout the year. Morgan Stanley suggests that if incoming data aligns with the MAS’s assessment and no significant downside risks arise, a steeper slope of S$NEER appreciation could be the most likely policy tightening option in April.
The bank’s analysis indicates that further tightening will depend on the pace of economic growth and the strengthening of inflationary pressures. “Following the strong performance in 2025, growth this year is expected to remain resilient,” the MAS highlighted, suggesting a positive outlook for the economy.
Morgan Stanley also pointed out that global growth shocks and inflationary trends will be critical indicators to watch. Any adverse events, such as geopolitical conflicts or tariff escalations, could impact global investor sentiment and delay the tightening process.
In conclusion, Morgan Stanley’s report underscores the likelihood of a policy shift by the MAS in April, contingent on economic indicators and external factors. This potential move aims to safeguard medium-term price stability amidst evolving economic conditions.
