The Monetary Authority of Singapore (MAS) paused its tightening cycle on 14 October. In a statement, it said it was keeping the Singapore dollar on its current appreciating path. MAS said there would be no change to the width of the Singapore dollar nominal effective exchange rate (S$NEER) policy band, or to the level at which it is centred.
Markets had expected another tightening
MUFG said the surprise in markets was an unexpected hold, with no change to the slope or the width of the policy band. It compared this with the very slight tightening at the July meeting. According to MUFG, the consensus and the market were positioned for MAS to tighten very slightly once again.
DBS said the pause reflects lower-than-expected 2026 inflation and expectations that slightly elevated price pressures will ease from mid-2027. MUFG said MAS also expects the positive output gap to narrow through next year as the AI cycle eases.
Two small steps earlier in 2026
In its April 2026 monetary policy review, MAS slightly increased the rate of appreciation of the S$NEER policy band, with no change to the width of the band or the level at which it was centred. In July it again increased the rate of appreciation very slightly, by an extent MAS said was smaller than in April.
DBS noted that MAS did not tighten its policy a third time this year. MAS said in July that, since April, the S$NEER had stayed in the upper half of the appreciating policy band.
In July, MAS projected core inflation to step up from that month and remain elevated, before moderating discernibly from around mid-2027. It also flagged upside risks to inflation. MAS said inflation could pick up more strongly than anticipated if energy prices spike anew, noting that fuel reserves have been drawn down significantly and that renewed supply disruptions in the Middle East could cause sharp surges in oil prices.