Singapore’s central bank has eased monetary policy for the second consecutive time, citing growing risks to the global economy and a weaker outlook for domestic growth in 2025. The Monetary Authority of Singapore (MAS) announced on Monday that it would reduce the slope of its exchange rate policy band — its primary tool for managing monetary conditions — while keeping the band’s width and centre unchanged.
The move was widely anticipated by economists and follows a similar policy adjustment in January, ending a long pause that began in 2023.
In its statement, MAS warned of “significant ramifications” for Singapore’s economy if global trade continues to deteriorate. “There are downside risks to Singapore’s economic outlook stemming from episodes of financial market volatility and a sharper-than-expected fall in final demand abroad,” it said.
The warning comes as global uncertainty mounts, particularly in response to US President Donald Trump’s planned wave of tariffs. Trump reaffirmed over the weekend that levies on electronics would go ahead, despite a short-term exemption, fuelling volatility in financial markets and concern among trade-dependent nations like Singapore.
Reflecting these concerns, Singapore’s Ministry of Trade and Industry has downgraded its 2025 growth forecast to a range of 0% to 2%, down from 1% to 3%. The economy expanded 3.8% year-on-year in the first quarter, falling short of expectations for a 4.5% increase.
The MAS highlighted Singapore’s vulnerability due to its high dependence on global trade and integration with global supply chains. “Slowing global and regional trade as well as heightened policy uncertainty will weigh on the external-facing sectors, which could spill over into the domestic-oriented sectors,” the central bank stated.
While Singapore was hit with a 10% US tariff — less severe than China’s 125% — the impact remains significant for its export-driven economy. Prime Minister Lawrence Wong has cautioned that growth may be “significantly impacted” and the risk of recession cannot be ruled out.
Following the MAS decision, the Singapore dollar edged slightly higher. It has risen about 3.7% against the US dollar so far this year, second only to the Japanese yen among Asian currencies, as investors respond to tariff uncertainties.
Selena Ling, Head of Research and Strategy at Oversea-Chinese Banking Corp, noted that further policy easing could be on the horizon. “Reciprocal tariffs are currently still in play, with sectoral tariffs possibly to come. So a further downshift in growth and inflation could prompt further monetary policy easing, but fiscal policy will also come into play,” she said. “A technical recession is possible.”
Singapore manages monetary policy through its currency, allowing the Singapore dollar to move within an undisclosed trading band. The MAS can adjust the slope, centre, or width of the band to influence the pace of the currency’s appreciation or depreciation.
Inflation pressures have cooled markedly in recent months. Core inflation — which excludes accommodation and private road transport costs — slowed to 0.6% in February, the lowest since June 2021. It marked the fifth consecutive month of easing. Looking ahead, MAS expects core inflation to average between 0.5% and 1.5% in 2025, down from its earlier forecast of 1% to 2%.
The next core inflation data is scheduled for release on April 23.
