Key points:
The Monetary Authority of Singapore (MAS) is projected to keep its monetary policy unchanged through 2025, driven by consistently high core inflation.
Despite a downward trend in headline inflation, core inflation has remained around 3% since mid-2023. This elevated level of core inflation suggests that MAS will not alter its policy parameters this year and will maintain a neutral stance on the Singapore dollar (SGD).
The economy of Singapore continued to expand in the first quarter of 2024, largely thanks to robust performance in the services sector. This growth comes with a backdrop of stabilising core inflation, which has been a significant factor in the decision of the MAS to keep monetary policy steady.
The services sector, which includes finance, insurance, and professional services, has been a key contributor to this economic resilience.
Related content: Interest rate tug-of-war for central banks – Hawkish vs dovish
Headline inflation in Singapore has been on a gradual decline, reflecting easing price pressures in some areas.
However, core inflation, which excludes volatile items like food and energy, has stabilised at an elevated level. This suggests underlying price pressures remain persistent, necessitating a cautious approach from the MAS.
USDSGD maintains at a stable price level, as observed on the VT Markets app.
Looking forward, the high core inflation rate is expected to keep the policy stance of the MAS unchanged. This stability should provide a predictable environment for market participants, presenting scalping opportunities for currency pairs involving the Singapore dollar in the short term.
However, if core inflation begins to decline significantly, MAS may consider adjusting its policy earlier than 2025.
Official partners:
