Economists are divided on Singapore’s monetary policy amid Trump 2.0 uncertainties.
By Xinghui Kok
SINGAPORE (Reuters) – Economists are split on whether to loosen monetary policy at Singapore’s central bank this week or leave it unchanged as U.S. President Donald Trump looks ahead to his second term in office.
Reuters polled 12 analysts, and six expect the Monetary Authority of Singapore’s currency-based monetary policy to reflect higher-than-expected inflation and stronger-than-expected economic growth in 2024 at a scheduled review on Friday.
The remaining six expected no change in policy settings.
The MAS policy was unchanged from the fifth in a row since its October 2022 tightening, as broader growth concerns kept officials on the sidelines.
The policy eased in March 2020 as Singapore braced for a recession as Covid-19 spread around the world.
MAS “may want to assess the implications of policies from the Trump administration, which will only become clear in the second quarter,” said Standard Chartered Bank Asia economist Jonathan Koh, who expects the facility to stop this week.
Lee Yen, risk analyst at Fitch Solutions division BMI, said Singapore’s economy provides MAS with room to protect and critically assess the global environment.
Globally, central banks are moving monetary policy toward gradual and cautious easing.
The Federal Reserve cut rates in December, but a Reuters poll this month expects it to stay on hold as Trump’s policies worry inflation.
The European Central Bank said further cuts were possible, but said a cautious approach was necessary because of the uncertainty.
Instead of using interest rates, the Singapore dollar manages monetary policy by allowing the local dollar to rise or fall within an unspecified trading band known as the nominal effective exchange rate, or S$NEER.
It adjusts the policy through three levers: the slope, midpoint and width of the policy band.
Maybank economist Chua Hak Bin sees room to ease policy “against a favorable inflation outlook”, predicting a gentle appreciation on the downside of the S$NEER band.
Chua expects inflation to fall further to below 2% in early 2025 after cooling from a peak of 5.5% in early 2023.
The central bank expects core and inflation to be between 1.5% and 2.5% for the year.
Bank of America analysts expect the MAS to leave policy unchanged, but with a dovish leadership, before easing at its next scheduled review in April.
MAS last year started making policy announcements quarterly instead of semi-annually.
