Weakening Economy Prompts Singapore to Tighten Exchange Rate Policy

Singapore’s central bank tightened monetary policy on Tuesday (14/4/2026) amid inflationary pressures and economic slowdown.

The Monetary Authority of Singapore (MAS) raised the rate of appreciation of the nominal effective exchange rate for the Singapore dollar, or S$NEER. The width and midpoint of the policy band remained unchanged.

The majority of analysts had anticipated this move. Of 13 analysts surveyed by Reuters, 11 predicted tightening. Two analysts expected no change.

MAS assesses that economic growth will slow throughout the year. The rise in imported energy costs is the primary source of pressure on prices of goods and services.

“GDP growth in the Singapore economy will slow throughout this year, while the output gap is expected to average around 0 percent. Singapore’s imported energy costs have increased. Prices of various imported goods and services are expected to rise in the coming quarter,” MAS wrote, as reported by CNBC.

On a quarterly basis, the economy contracted by 0.3 percent compared to the previous quarter after seasonal adjustment.

Core inflation was recorded at 1.4 percent year-on-year in February, before the conflict occurred. The latest data will be released next week.

The Ministry of Trade previously projected economic growth in the range of 2 percent to 4 percent for 2026. MAS will update its projections in May.

MAS also raised its inflation forecasts. Core inflation and headline inflation are expected to be in the range of 1.5 percent to 2.5 percent, higher than the previous projection of 1.0 percent to 2.0 percent.

“Due to higher energy costs impacting supply chains worldwide, various Singapore import costs will increase,” MAS wrote.

Assistance includes cash transfers and fuel vouchers to mitigate the impact of rising living costs.

MAS had held policy steady in its last three meetings. Those meetings took place in January, October, and July. The last easing was in April last year.

Singapore does not use interest rates as its primary instrument. Monetary policy is conducted through managing the exchange rate against trading partners’ currencies within a certain range.

Adjustments are made through three instruments: the slope, midpoint, and width of the policy band.