Central bank adjusts inflation outlook, expects moderation in inflation by 2025
The Monetary Authority of Singapore (MAS) kept its monetary policy unchanged for the fifth consecutive meeting, maintaining the rate of appreciation of the Singapore nominal effective exchange rate (S$NEER) policy band. This decision aligns with market expectations.
MAS forecasts that Singapore’s gross domestic product (GDP) growth will be at the higher end of the official forecast range, between 2% and 3%, for the full year. This is slightly more optimistic than the Ministry of Trade and Industry’s forecast range of 1% to 3%.
In terms of inflation, MAS lowered its full-year headline inflation forecast to a range of 2% to 3%, while leaving the core inflation forecast unchanged at 2.5% to 3.5%.
MAS remains focused on managing inflationary pressures and ensuring medium-term price stability. The central bank expects inflationary pressures to ease towards the end of the year, with core inflation expected to fall to around 2% in 2025.
Outlook for Singapore’s Economy
MAS notes that Singapore’s economy is expected to strengthen throughout 2024, with a slight negative output gap closing by year-end. The global economic outlook remains stable, but risks such as geopolitical tensions and the pace of monetary easing in major economies could influence both inflation and growth.
The central bank stated that its current monetary policy settings are appropriate to address imported inflation and domestic cost pressures, while supporting overall economic stability.
While core inflation is expected to ease, both upside and downside risks to inflation persist, with domestic labour cost increases and geopolitical tensions being potential sources of volatility.
