What’s going on here?
Singapore is closely watching November’s inflation report, which could influence the Monetary Authority of Singapore’s (MAS) upcoming policy decisions amid global trade uncertainties.
What does this mean?
November’s core inflation in Singapore is expected to remain steady at 2.1%, aligning closely with MAS’s quarterly forecast of 2%. However, with economists at DBS Bank predicting a core inflation average of 1.8% by 2025, MAS might hold off on easing until US policies provide a clearer backdrop. Singapore uses the Singapore dollar nominal effective exchange rate (S$NEER) to guide its monetary policy, adjusting factors like slope and width to manage economic conditions. Recent surveys show reduced expectations for a January policy easing, backed by Moody’s and Maybank’s analyses, which suggest that persistent inflation below 2% and global trade impacts might prompt future adjustments. Specifically, potential deflation due to US tariffs under President-elect Trump could ripple through Singapore’s economy.
Why should I care?
For markets: Singapore’s cautious approach signals patience.
With only a third of economists expecting immediate adjustments to Singapore’s monetary policy, traders and businesses should prepare for steady conditions in the short term. The focus is on how President-elect Trump’s trade policies might affect global trade flows and Singapore’s inflation. A wait-and-see strategy by MAS could stabilize the S$NEER, providing a predictable economic environment despite external pressures.
The bigger picture: Global trade and local trends.
As Singapore awaits US trade policy clarity, the implications are significant for regional economies reliant on trade. Any delay in easing by MAS reflects broader concerns over global economic shifts and potential deflationary pressures from cheaper imports influenced by US tariffs. These dynamics underscore the interconnectedness of national policies with global trade, influencing economic strategies not just in Singapore but across Asia.