The Monetary Authority of Singapore (MAS) has made a strategic move to tighten its monetary policy in 2026, as outlined in RHB Bank’s latest Global Economics and Market Strategy Report. The report, attributed to Barnabas Gan, Group Chief Economist and Head of Market Research at RHB Bank, suggests that the MAS aims to increase the Singapore Dollar Nominal Effective Exchange Rate (S$NEER) gradient to 1.50%, with a potential rise to 1.75% by the end of the year.
This decision is seen as a pre-emptive measure to manage inflation expectations amidst a widening output gap. The MAS has opted for a “very slight” increase in the rate of appreciation of the policy band, which RHB interprets as a mild 25 basis points steepening, bringing the gradient to +1.25%. Notably, there has been no alteration to the width of the policy band or its central level.
Gan’s analysis indicates that this move by the MAS is likely a token tightening decision, aimed at anchoring inflation expectations in a challenging economic environment. The report highlights the importance of this adjustment in light of emerging cost pressures anticipated in the second half of 2026.
As Singapore navigates these economic uncertainties, the MAS’s policy adjustments will be closely monitored for their impact on the nation’s economic stability and inflation control. The potential for further tightening by the end of the year underscores the dynamic nature of Singapore’s economic strategy in response to global and domestic challenges.
