Economists Divided on July Policy Move as MAS Cuts Growth Forecast

The Monetary Authority of Singapore (MAS) has eased policy for the second time this year, citing weaker global trade and a dimmer economic outlook. With growth and inflation forecasts revised down, economists are split on whether further easing will follow in July or if MAS will adopt a wait-and-see approach.

MAS adjusts policy amid global uncertainties and slowing economic growth.

Uncertainty Around Further Policy Easing

Economists are split on whether the Monetary Authority of Singapore (MAS) will ease monetary policy again in July 2025. This follows two earlier adjustments this year—in January and April—where MAS slightly slowed the pace of the Singapore dollar’s appreciation.

Latest Policy Move Reflects Caution

On April 14, MAS made a small reduction to the slope of the Singapore dollar nominal effective exchange rate (S$NEER) policy band, while keeping its width and mid-point unchanged. This indicates a more cautious stance in response to global economic uncertainties.

Global Trade Tensions Weigh on Outlook

The policy change comes amid escalating global trade tensions, including new U.S. tariffs and retaliatory actions by other countries. These developments have weakened the outlook for global trade and growth, directly affecting Singapore’s open and trade-reliant economy.

Growth and Inflation Forecasts Revised Down

In light of these challenges, MAS cut its 2025 GDP growth forecast to between 0% and 2% (down from 1%–3%) and lowered both core and headline inflation projections. A negative output gap is now expected for the year.

Possible Re-Centering of the Exchange Rate Band

While not the base case, some analysts suggest MAS might also adjust the central point of the policy band later in the year if inflation and growth weaken further. Such a move would be modest and measured, if it happens at all.

Room for Fiscal Support

In addition to monetary policy, economists highlight that Singapore has ample fiscal reserves to provide support if needed. The government may introduce further stimulus measures—possibly through off budget packages—especially if economic conditions continue to deteriorate.

With global risks rising and growth slowing, MAS has room to ease policy further—but much depends on how conditions unfold. Fiscal support may become more crucial if the downturn deepens.