Inflation Forecasts Lowered, But Inflationary Pressures Persist
Singapore’s central bank, the Monetary Authority of Singapore (MAS), decided to keep its monetary policy unchanged in October, following its previous decision in April. This pause aligns with market expectations and will last through the rest of 2023. However, MAS announced that starting in 2024, it will switch to a quarterly schedule for its monetary policy statement (MPS), with reviews set for January, April, July, and October.
MAS also revised its inflation forecast for 2024, projecting a decline in both headline inflation, to between 3% and 4%, and core inflation, to between 2.5% and 3.5%. While inflation has moderated, with core inflation expected to slow in 2024, the MAS emphasized the need for a continued appreciation of the Singapore dollar’s nominal effective exchange rate (S$NEER) to manage imported inflation and domestic cost pressures.
While the growth outlook remains cautiously optimistic, economists believe the MAS is likely to maintain its cautious stance in the coming months, with potential policy adjustments depending on how inflation trends evolve. Key risks, including rising oil prices and geopolitical uncertainties, remain factors that could influence future policy decisions.
