Singapore's central bank moved to tighten monetary policy settings on Tuesday, adjusting the exchange rate band that forms the core of its policy framework while leaving other parameters intact.
The Monetary Authority of Singapore (MAS) said it would increase slightly the rate of appreciation of the S$NEER policy band. The MAS noted there would be no change to the width of the band or to the level at which the band is centred.
In its statement, the MAS indicated it expects core inflation to rise and stay elevated over the coming quarters. On the economy, the central bank warned that growth in 2026 as a whole is likely to step down from the above-trend pace of growth recorded in 2025 and that, concomitantly, the positive output gap will narrow.
"GDP growth in 2026 as a whole is likely to step down from the above-trend pace of growth recorded in 2025. Concomitantly, the positive output gap will narrow," the MAS said.
Market watchers had largely anticipated a tightening ahead of the review. Of 13 analysts polled prior to the decision, 11 expected the MAS to tighten policy and two forecast no change. Those who foresaw a tightening pointed to the impact of the war in the Middle East in driving up energy prices and heightening inflation risks, which in turn darkened the growth outlook both at home and abroad.
The policy move follows a period in which the MAS held policy steady at its three most recent meetings in January, October and July. The authority had eased policy last April.
The decision coincided with preliminary government data showing the economy expanded 4.6% in the first quarter of 2026, a pace described as weaker than market expectations. On a quarter-on-quarter, seasonally adjusted basis, the advance estimates showed GDP contracted 0.3% from the fourth quarter of 2025.
Recent inflation readings provided context for the MAS's outlook. Data released last month indicated core inflation was 1.4% year-on-year in February, a figure recorded prior to the outbreak of the war in the Middle East. The report noted that official inflation data for March is due next week.
Implications and next steps
The MAS's modest tightening via the S$NEER appreciation rate signals a calibrated response to evolving inflation risks while maintaining the overall structure of its exchange rate-based framework. With headline growth showing signs of slowing on a quarter-to-quarter basis and core inflation projected to rise, further updates from upcoming inflation data will be watched closely.