- The MAS reduced slightly the slope of its SGD NEER policy band during its April 2025 policy review.
- Advance GDP growth in 1Q25 was -0.8% QoQ sa and 3.8% YoY.
- We lower our real GDP growth forecast for 2025 to 2.0%, amid escalating trade tensions.
- The MAS sees downside risks to inflation, after cutting its core inflation forecast to 0.5-1.5%.
- We expect the MAS to shift to a neutral stance in July.
Below is a summary; for full report and detailed charts, please download the PDF
The Monetary Authority of Singapore (MAS) reduced slightly the slope of its SGD NEER policy band during its April 2025 review, in tandem with the downward revisions in the official economic growth and inflation outlook for 2025. This move marked a back-to-back easing following a similar decision in January 2025.
Lowering growth outlook
The MAS’s monetary policy easing decision considered Singapore’s dimming growth prospects in 2025, with the Ministry of Trade and Industry (MTI) downgrading its 2025 growth projection range to 0.0%-2.0% (from 1.0-3.0%). We also lower our Singapore real GDP growth forecasts to 2.0% for 2025 and 1.8% for 2026 (from 2.8% and 2.5%, respectively). The city-state’s growth outlook faces heightened downside uncertainties from an increasingly protectionist global landscape. Growth disappointed expectations in early 2025 amid softer manufacturing and services activities, based on advance estimates released alongside the MAS’s decision. Real GDP in 1Q25 contracted for the first time since 1Q23 by 0.8% quarter-on-quarter seasonally adjusted (QoQ sa). This compared to 0.5% QoQ sa growth in 4Q24. Growth in year-on-year (YoY) terms of 3.8% YoY in 1Q25, while still above-potential, was cooler than the expansion of 5.0% YoY in 4Q24.
Heightened unpredictability and volatility are the hallmarks of Trump 2.0. The global economy and financial markets, including Singapore, therefore remain beholden to the US tariff roller coaster and fluid dynamics. We anticipate much weaker Singapore economic growth in 2H25, as deteriorating external demand will hurt trade-related sectors, although growth might hold up in 1H25.
Contained inflation in 2025, but with risks
The MAS’s considerations of a deteriorating external and domestic economic outlook also fed into its inflation outlook for 2025 that accompanied its policy easing decision. Policymakers revised down both core inflation and headline inflation projection ranges for 2025 to 0.5-1.5% (from 1.0-2.0% and 1.5-2.5%, respectively, during its monetary policy review in January 2025). The MAS expects Singapore’s output gap to turn negative in 2025, with imported and domestic cost pressures remaining low. This assessment was weaker than in January 2025, when it expected the level of output to come in close to the economy’s potential for full-year 2025. The MAS now sees downside risks to inflation in 2025, more dovish than the uncertain outlook that was highlighted in January 2025. Our respective core and headline inflation forecasts of 1.0% and 1.3% for 2025 are within the official ranges. These reflect our expectations for contained imported inflation and reduced pass-through of business costs to consumer prices (see ‘Singapore chartbook: Trade war and scope for MAS easing’ for our detailed inflation charts and analysis).
More transparency in SGD NEER policy
Apart from slightly reducing the slope of the appreciating SGD NEER policy band, the MAS provided two valuable references on the NEER’s position and recent behaviour. First, the SGD NEER has been fluctuating within the upper half of the policy band after its last re-centring in October 2022. Second, the SGD NEER was flattish over the last three months vs. the previous three months.
In our view, the disclosure of the NEER’s performance will likely be part of the MAS’s strategic effort to enable analysts to recalibrate their models more accurately amid heightened market volatility driven by Trump’s aggressive tariff policy. This transparency would help mitigate speculation and misinterpretation, and align expectations with its policy stance.
More policy easing in July
Barring a material improvement in the growth and inflation outlook, we expect the MAS to shift to a neutral stance in July, setting the SGD NEER policy band on a zero-appreciation path.
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