The Monetary Authority of Singapore (MAS) has kept its Singapore dollar policy band unchanged while projecting both core and headline CPI inflation in a 1.5% to 2.5% range for 2026.

The decision leaves intact the central bank’s main policy settings for an economy where trade plays an unusually large role. In Singapore, imports and exports exceed 300% of GDP, making exchange-rate management a central tool for controlling price pressures in one of the world’s most trade-exposed economies.

How Singapore’s monetary policy framework operates

Unlike many major central banks, including the Federal Reserve and the European Central Bank, MAS does not conduct monetary policy primarily by setting interest rates. Instead, it manages the nominal effective exchange rate of the Singapore dollar, known as the S$NEER.

The S$NEER framework guides the Singapore dollar against a basket of currencies from the country’s major trading partners. Rather than directly adjusting borrowing costs, MAS uses the exchange rate to influence imported prices and broader inflation conditions. That makes the policy band especially important when external cost pressures, including energy prices, are feeding into domestic inflation forecasts.

The policy band has three main adjustable components: its slope, which determines the pace at which the currency is allowed to appreciate or depreciate; its width; and its center point. In the latest decision, MAS kept all three parameters unchanged, meaning it did not alter the rate of appreciation, the permitted trading range, or the midpoint of the band.

The hold follows a tightening earlier in the year. On April 14, 2026, MAS increased the slope of the S$NEER policy band, marking its first tightening move since 2022. That decision was prompted by rising imported energy costs, which lifted inflation projections from the 1.0% to 2.0% range set in January to the current 1.5% to 2.5% range.

In its January 29, 2026 statement, MAS had already maintained the pace of appreciation of the policy band while leaving the width and center point unchanged, alongside higher inflation forecasts.

Next policy statement scheduled for July 27

The next MAS Monetary Policy Statement is scheduled for July 27, 2026. Market consensus points to another hold, with observers describing growth and inflation risks as broadly balanced.

Energy costs remain a key variable for the policy outlook. The April tightening was driven by imported energy inflation, and a further rise in oil prices or LNG costs could lead MAS to steepen the slope of the S$NEER policy band again.

MAS expects GDP growth to slow in 2026, with the output gap averaging near zero percent. An output gap near zero suggests the economy is expected to operate close to its estimated capacity, a backdrop that helps explain why the policy debate is centered on balancing slower growth against inflation still projected above the earlier January range.