The Monetary Authority of Singapore (MAS) announced a pre-emptive tightening of its monetary policy in the April 2026 Monetary Policy Statement (MPS), released on 14 April. The central bank increased the slope of the Singapore dollar nominal effective exchange rate (S$NEER) policy band from an estimated 0.5% per annum to 1.0% per annum, a move aligned with Bloomberg consensus and UOB’s expectations. This adjustment aims to address potential imported inflation pressures.
MAS has revised its 2026 core and headline inflation forecasts to a range of 1.5% to 2.5%, up from the previous 1.0% to 2.0% forecast in January. The policy statement reflects a greater confidence in the inflation outlook compared to growth, noting that global energy prices are expected to remain elevated due to ongoing geopolitical tensions and supply chain disruptions.
The decision comes amidst a backdrop of significant uncertainty in the global economic environment, particularly concerning shipping flows through the Strait of Hormuz. MAS highlighted that energy supply shortfalls and higher input costs could impact energy-dependent industries such as petrochemicals and transport. Additionally, growth in Singapore’s major trading partners is anticipated to weaken, further affecting the local economy.
UOB has downgraded its full-year 2026 GDP growth forecast for Singapore to 2.5%, down from a previous estimate of 3.6%. The bank anticipates that MAS may further tighten monetary policy in the October 2026 MPS, potentially advancing the move to July.
The S$NEER index fell by approximately 15 basis points following the policy announcement, reflecting some profit-taking as more aggressive monetary policy actions did not materialise. MAS reiterated its readiness to curb excessive volatility in the S$NEER, underscoring the heightened uncertainty in the current economic landscape.
