MAS expected to hold Singdollar policy steady on Oct 14

SINGAPORE - Singapore’s central bank is expected to leave monetary policy unchanged this week as it weighs subdued inflation and the continuing threat of US trade measures against a resilient domestic growth outlook.

Sixteen out of 20 economists in a Bloomberg survey forecast the Monetary Authority of Singapore (MAS) – which uses foreign exchange rather than interest rates – will maintain its settings on Oct 14. Four respondents, including DBS Group Holdings and TD Securities, expect it to resume easing after leaving policy unchanged at its last review in July.

MAS, which holds four policy reviews a year, had loosened settings in January and April to help support growth. Unlike most central banks, which use interest rates, Singapore seeks to maintain medium-term price stability by managing the Singapore dollar’s trade-weighted appreciation within a target band. 

Its Oct 14 decision comes as central banks across the region adopt divergent paths, with

Indonesia and New Zealand deepening cuts

to shore up growth amid rising global trade protectionism, while Thailand, Malaysia and Australia have opted to hold steady as they gauge the impact of earlier moves. 

The US Federal Reserve, meanwhile,

lowered borrowing costs in September

for the first time since December. 

“The central bank appears to be waiting for more definitive evidence of economic deterioration before making another move,” said Mr Lloyd Chan, a strategist at MUFG Bank.

The trade war between the US and China flared up again in recent days as Beijing imposed sweeping new curbs on rare-earth mineral exports and US President Donald Trump announced an additional 100 per cent tariff on China. Businesses are bracing themselves for disruptions from the escalation.

Singapore will also release preliminary third-quarter gross domestic product (GDP) data on Oct 14, which will likely show economic growth slowed after a solid June quarter. At the same time, core inflation has cooled further.

Singapore’s domestic economy is showing signs of resilience – consumer spending rose at a faster-than-expected pace in August and manufacturing activity climbed to 56.4 in September, marking its eighth month of expansion. Private home prices jumped the most in three quarters, after a resurgence in sales of new apartments.

That, together with regional safe-haven demand, has boosted the Singapore dollar. While it is up more than 5 per cent against the US dollar so far in 2025, it has been relatively unchanged since the last MAS decision at the end of July. 

Singapore’s core inflation slowed for a second straight month in August and the authorities expect imported price increases to “remain moderate” in the near term. They see the core metric averaging 0.5 per cent to 1.5 per cent in 2025.

One area of uncertainty is US tariffs, including sectoral levies on pharmaceuticals. Any drag from that could be cushioned by an upswing in the global semiconductor cycle, underpinned by strong artificial intelligence-related investment demand, economists said.

According to the Economic Development Board, Singapore accounts for about 10 per cent of global chip output and 20 per cent of global semiconductor equipment production. The sector overall makes up roughly 6 per cent of GDP, Mr Khoon Goh, an economist at ANZ Banking Group, wrote in a note. 

Given that backdrop, MAS is unlikely to turn “too negative” on the outlook, he said. Mr Goh expects the Government to step in with a “comprehensive” fiscal package in the 2026 Budget, including cash transfers to households and enhanced training and employment placement support. 

“This means monetary policy can sit on the bench and only come on to the field if needed next year,” he said. BLOOMBERG