Singapore’s Central Bank Eases for First Time Since 2020

Singapore’s central bank eased its monetary policy settings for the first time since 2020 as price pressures show signs of abating.

Author of the article:

Bloomberg News

Swati Pandey

Published Jan 23, 2025  •  2 minute read

Signage of the Monetary Authority of Singapore at its building, in Singapore, on Tuesday, Jan. 31, 2023. The financial watchdog's focus on enforcement is crucial to the country's ambition to be a trusted global financial hub where investors park trillions of dollars, the bulk from overseas. Photographer: Edwin Koo/Bloomberg Photo by Edwin Koo /Bloomberg

(Bloomberg) — Singapore’s central bank eased its monetary policy settings for the first time since 2020 as price pressures show signs of abating.

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The Monetary Authority of Singapore, which uses the exchange rate as its main policy tool rather than interest rates, will “reduce slightly” the slope of its policy band, according to a statement released Friday. There will be “no change to the width of the policy band or the level” at which it is centered.

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Read: Singapore Inflation Slows, Backing Case for MAS to Ease

A majority of the 17 economists polled by Bloomberg News anticipated that MAS would reduce the slope of the currency band. The central bank had tightened five times since October 2021 before an extended pause that began in 2023.

The Singapore dollar weakened against its US counterpart after the decision.

The MAS allows the currency to move within a band, adjusting the slope, center or width as needed to alter the pace of appreciation or depreciation. The central bank doesn’t disclose details of the basket, the band nor the pace of appreciation or depreciation — just whether they’ve changed.

Singapore, which imports the lion’s share of basic goods, has seen core inflation cool to below 2%.

“MAS Core Inflation has moderated more quickly than expected and will remain below 2% this year, reflecting the return to low and stable underlying price pressures in the economy,” the central bank said in the statement. “MAS will closely monitor global and domestic economic developments, and remain vigilant to risks to inflation and growth.”

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The MAS decision comes in a week when President Donald Trump was inaugurated for a second term, vowing to prioritize American interests and promising a “golden age” for the superpower. Trump has threatened sweeping tariffs on both allies and adversaries, casting the imposts as a source of revenue and a way to force companies to bring manufacturing jobs back to the US.

Central bankers are taking a watchful approach to the proposed tariffs, waiting to see what’s actually implemented before assessing the impact. He signaled plans to impose previously threatened tariffs of as much as 25% on Mexico and Canada by Feb. 1, and said he’s considering 10% on Chinese imports.

In Singapore, authorities have been similarly cautious as they monitor risks and keep a close eye on the economy and labor-market indicators, which so far have remained resilient.

“While an escalation of trade frictions could be inflationary for some economies, their impact on Singapore’s import prices is likely to be offset by the disinflationary drags exerted by weaker global demand,” MAS said.

Read: Singapore Leader Says US-China Rivalry to Rise as Trump Returns

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Singapore’s economy grew 4% in 2024, the fastest pace in three years and surpassing government’s revised estimate while Bloomberg Economics reckons the city-state will expand 2.5% this year. The government said in November it expects gross domestic product to rise between 1%-3% in 2025.

The MAS review comes on the same day as the Bank of Japan is expected to push up borrowing costs further. Next week, the Federal Reserve will hold its first policy meeting of the year with questions remaining over the future pace of easing. 

—With assistance from Shinjini Datta and Aradhana Aravindan.

(Adds market reaction, comment from statement.)

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