View of Singapore skyline and Marina Bay.
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The Bank of Singapore kept monetary policy unchanged on Monday. as expectedData showed the economy recovered in the third quarter, but analysts are betting that policy will be loosened early next year to guard against external risks.
The Monetary Authority of Singapore said it would maintain the current rate of appreciation in its exchange-rate-based policy band, known as the Nominal Effective Exchange Rate (S$NEER).
The width and center level of the band will also remain unchanged, the MAS said.
“Risks to Singapore’s inflation outlook are more balanced than three months ago,” the MAS said in a statement, adding that growth momentum had picked up.
In addition, previously released data from the Ministry of Trade showed that, supported by a boost in manufacturing, gross domestic product increased by 4.1% annually in the third quarter, accelerating from the 2.9% growth rate in the second quarter. Policymakers have set expectations for 2025 The outlook is optimistic.
“The growth outlook is more positive,” said Selena Ling, an economist at OCBC Bank. But he added that geopolitics and trade conflicts were concerns for Singapore, and there was a chance the MAS could ease policy at its next review in January.
Shivaan Tandon, market economist at Capital Economics, agreed, saying “the risk of monetary policy being too tight for too long will soon come into focus, prompting central banks to pivot.”
The Monetary Authority said it expected economic growth to reach the upper limit expected by the Trade Ministry Adjusted GDP growth forecast range It forecast growth of 2.0% to 3.0% in 2024, but warned that external risks created “significant” uncertainty for next year.
“A sharp escalation in geopolitical and trade conflicts could cause considerable drag on global and domestic investment and trade,” the central bank said.
Singapore is often seen as a leader in global growth because its international trade dwarfs its domestic economy.
MAS expects core inflation to fall further to around 2% by the end of 2024.
Core inflation has gradually declined from a peak of 5.5% in early 2023 and has reached July 2-1/2 year low 2.5% The annual growth rate edged up to 2.7% in August.
As an economy heavily reliant on trade, Singapore leverages unique method Manage monetary policy by adjusting the dollar against a basket of currencies rather than adjusting domestic interest rates as most other countries do.
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