With inflation at a four-year low, economists are split on whether MAS will ease policy further.

Singapore’s inflation held steady at 0.8% in June—its lowest since early 2020—just as economists brace for a key monetary policy decision from the Monetary Authority of Singapore (MAS) amid global uncertainty and domestic growth volatility.

Inflation Holds, Policy in Question

Singapore’s headline inflation came in at 0.8% for June 2025, slightly below economist expectations of 0.9%. Core inflation, which excludes accommodation and private transport costs, remained at 0.6%. The subdued inflation figures mark the lowest levels in over four years and have renewed speculation around MAS’s upcoming policy direction.

The MAS, which uses exchange rate settings rather than interest rates to manage inflation, has eased its policy twice this year. Analysts are now divided on whether a third adjustment is imminent or if the central bank will hold its position.

Economists Split on MAS Move

In a Reuters poll, six of twelve economists expect MAS to loosen policy further during its July 30 review, while the rest anticipate a pause. Some, including Maybank and OCBC analysts, believe recent easing efforts warrant more time to show effect. Others, like Barclays, argue that the central bank may “flatten” the slope of the Singapore dollar’s policy band to preempt slowing global momentum.

Singapore’s export-heavy economy remains sensitive to external headwinds, with the MAS projecting subdued domestic growth in the second half of 2025 due to weakening global demand, softer investments, and delayed tariff impacts.

Frontloading Boosts GDP—For Now

Singapore’s economy has shown resilience despite global uncertainty, growing 4.1% and 4.3% year-on-year in Q1 and Q2 respectively. Much of this has been attributed to frontloading in trade and manufacturing sectors—a temporary bump that analysts warn could fade quickly.

Capital Economics’ Shivaan Tandon cautioned that the export-driven services sector will likely cool, and manufacturing will continue to underperform. MAS also reiterated that despite strong Q2 growth, the full-year GDP forecast remains at 0%–2%.

Currency-Based Policy Under the Lens
MAS manages monetary conditions through the Singapore dollar nominal effective exchange rate (S$NEER), adjusting the slope, width, and midpoint of a currency band. Analysts say MAS may opt to pause adjustments this round to assess previous moves while awaiting more clarity on global trade and U.S. tariffs.

The U.S. Federal Reserve and European Central Bank have also opted to hold rates steady, signaling a broader wait-and-see approach among central banks globally.

As inflation cools and growth risks linger, Singapore’s monetary policy stands at a critical juncture. For both Singaporeans and regional observers like Indonesia, the MAS’s upcoming move offers insight into how small, open economies navigate global headwinds through non-traditional monetary tools. Whether MAS eases or holds, one thing is clear: the balance between inflation control and growth support has never been more delicate.

Sources: CNBC (2025) , Reuters (2025)

Keywords: Singapore Inflation 2025, MAS Monetary Policy, Core Inflation Rate, Economic Growth Forecast, Singapore Dollar Policy Band, Frontloaded Exports