The Monetary Authority of Singapore (MAS) has announced a modest increase in the rate of appreciation of the Singapore dollar nominal effective exchange rate (S$NEER) policy band, as detailed in the July 2026 Monetary Policy Statement (MPS). This decision reflects a 25 basis points (bps) slope steepening to 1.25% per annum, marking a more measured approach compared to the previous tightening in April 2026.
The move comes amidst heightened macroeconomic and geopolitical uncertainties, with MAS opting for gradual policy adjustments to avoid an excessively strong S$NEER. The central bank’s decision to maintain the width and centre of the policy band unchanged signals a cautious stance, as markets had anticipated a potential 50bps increase.
MAS’s decision is influenced by global economic resilience, particularly in IT-related goods and services, bolstered by robust AI-related investments. Domestically, Singapore’s economy outperformed expectations in the second quarter of 2026, with a 5.7% year-on-year growth, driven by tech-related sectors despite challenges in oil-related industries.
Inflation forecasts remain stable, with core and headline inflation expected to rise in the short term due to higher energy prices and imported costs. However, MAS anticipates inflation easing in the latter half of 2027.
Looking ahead, MAS is expected to keep the current S$NEER slope settings unchanged through 2027, although further adjustments may occur if energy prices continue to impact the broader consumer price index. The central bank remains vigilant, monitoring potential demand-pull pressures and global economic developments.
