By Jun Yuan Yong
SINGAPORE (Reuters) – Singapore is expected to further ease monetary policy at next week’s review, following a move in January, as U.S. tariffs against its trading partners cast a shadow over the outlook for the export-reliant city-state.
The central bank manages monetary policy by targeting the Singapore dollar nominal effective exchange rate, known as the S$NEER, rather than interest rates. It adjusts policy via three levers: the slope, mid-point and width of the policy band.
Nine out of 10 analysts polled by Reuters expect the Monetary Authority of Singapore to loosen policy at its April 14 review by reducing the slope of the band in which it allows the S$NEER to trade.
Lee Yen Nee, risk analyst at Fitch Solutions unit BMI, expects the MAS to ease policy given the mounting risks to growth, including the imposition of tariffs by U.S. President Donald Trump.
“The latest tariff announcement by the U.S. raises the risk of a global recession, which would be very negative for the Singapore economy given how trade-dependent it is,” said Lee, estimating that tariffs could knock around 1 percentage point off Singapore’s economic growth.
Trade minister Gan Kim Yong has said Singapore was reviewing its economic forecasts because of the tariffs. Currently, GDP is forecast to grow between 1% and 3% in 2025, after growth of 4.4% last year.Maybank economists have cut their forecast for Singapore’s GDP growth this year to 2.1% from 2.6%.
HSBC economists also expect MAS to reduce the slope of the S$NEER, noting that inflation has undershot the central bank’s forecast range of 1% to 2% so far this year.
Core inflation fell to 0.6% in February, the lowest in nearly four years.
The outlier of those polled was RHB group chief economist Barnabas Gan, who expects the MAS to hold monetary policy.
He was reluctant to downgrade his growth forecast of about 2.8%, as growth still appeared to “be quite resilient”.
“We are still drawing hope that there may be some easing of tariff risks,” he said, noting that at 10% Singapore had the lowest U.S. tariff rate across Southeast Asia.
Gan said there could be an easing in the second half of the year.
(Reporting by Jun Yuan Yong; Editing by John Mair and Sam Holmes)
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