MAS keeps monetary policy steady, flags slowdown in second half

The Monetary Authority of Singapore has cautioned that the city-state’s economy is expected to slow down in the latter half of 2025 compared to its robust performance in the first half. This announcement was made as the central bank opted to maintain its current monetary policy.

Despite trade concerns stemming from the Trump administration, the Monetary Authority of Singapore has decided to keep the width and level of its policy band unchanged.

The central bank stated, “Prospects for the Singapore economy remain subject to significant uncertainty, particularly in 2026, with changes in effective tariff rates worldwide potentially impacting the performance of Singapore’s trade-dependent sectors.”

While Singapore’s export-driven economy managed to avoid a technical recession in the second quarter, with a growth rate of 1.4% quarter-over-quarter, financial volatility and geopolitical shocks could further strain Singapore’s growth outlook.

Unlike many other countries, Singapore uses its exchange rate rather than interest rates to regulate its monetary policy. The Monetary Authority of Singapore adjusts the Singapore dollar against a basket of its main trading partners within a specified policy band.

Following two earlier monetary policy easings in 2025, the central bank feels equipped to address risks to medium-term price stability.

Deputy Prime Minister Gan Kim Yong recently highlighted the U.S.’s noncommittal stance on maintaining a 10% tariff on Singaporean imports, despite the trade deficit and existing free trade agreement between the two countries.

Singapore, heavily reliant on exports which constitute a significant portion of its GDP, remains in a challenging position amidst evolving global trade dynamics.

— Stay tuned for further updates on this developing story.