Singapore keeps monetary policy unchanged as growth remains firm

By Xinghui Kok and Jun Yuan Yong

SINGAPORE (Reuters) -Singapore's central bank kept its monetary policy settings unchanged on Tuesday, as expected, as growth in the city-state remained resilient despite challenges from U.S. tariffs.

Ten of 14 analysts polled by Reuters ahead of the review expected the MAS to keep policy settings unchanged, while the other four expected an easing.

The Monetary Authority of Singapore (MAS) said it will maintain the prevailing rate of appreciation of its exchange rate-based policy band. There would be no change to the width of the band or the level at which it is centred.

"Singapore’s economic growth has turned out stronger than expected and the output gap will remain positive in 2025 and come in around 0% next year," the central bank said in a statement.

OCBC economist Selena Ling said the headwinds from U.S. President Donald Trump's sweeping tariffs were not as bad as previously feared.

"Tariff concerns, while lingering, have subsided slightly since April's 'liberation day'," Ling said. "Front loading has gone on longer, tariffs have come down from April levels, the U.S. economy has been a bit more resilient despite the slowdown."

At its last review in July, the MAS held policy steady, after easing its reviews in April and January.

The decision came as preliminary government data on Tuesday showed the economy doing better than expected, growing 2.9% in the third quarter from a year earlier and better than expectations of 1.9%.

The MAS said the trade ministry would announce growth forecasts for 2025 and 2026 in November.

OCBC's Ling expects the economy to post growth of 3% this year, "even if Q4 growth moderates to below 1% year-on-year".

Maybank economist Chua Hak Bin was more optimistic, expecting GDP to come in closer to 3.5%, higher than his "already bullish GDP forecast of 3.2% for the year".

Singapore's exports to the U.S. are subject to a 10% baseline tariff. That is lower than tariffs imposed on its Southeast Asian neighbours, but sectoral tariffs - such as a 100% tariff on branded drugs - are a concern.

In August, the government upgraded its GDP growth forecast for 2025 to 1.5% to 2.5% from 0.0% to 2.0% after a better-than-expected first-half performance.

Instead of using interest rates, Singapore manages monetary policy by letting the local dollar rise or fall against the currencies of its main trading partners within an undisclosed trading band, known as the Singapore dollar nominal effective exchange rate, or S$NEER.

It adjusts policy via three levers: the slope, mid-point and width of the policy band.

(Reporting by Xinghui Kok and Jun Yuan Yong; Editing by John Mair and Sam Holmes)

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