The Monetary Authority of Singapore announced on 24 January 2025 that it would slightly reduce the slope of its Singapore dollar nominal effective exchange rate policy band, delivering the first easing of monetary policy since 2020. The MAS manages Singapore's monetary conditions primarily through the exchange rate rather than a conventional interest rate instrument, adjusting the slope, width, and centre of the S$NEER band to influence domestic inflation and broader financial conditions. A reduction in the slope of the appreciation path means the Singapore dollar will strengthen against the basket of currencies tracked by the S$NEER at a somewhat slower pace, providing a modest loosening of monetary conditions.
Core inflation moderated to approximately 2% year-on-year in the fourth quarter of 2024.
FIRST EASING AFTER THE 2021–22 TIGHTENING CYCLE
The January 2025 move is the first easing since a 2021–22 tightening cycle during which the MAS raised the slope of the S$NEER band multiple times as Singapore, like much of the world, confronted elevated post-pandemic inflation.
The S$NEER will continue to appreciate against the currency basket, but at a slower rate than it has been moving during the tightening period.