Experts split on Singapore’s monetary policy outlook for 2025

UOB expects MAS to ease policy, whilst RHB sees no change until mid-2025.

Experts have differing views on Singapore's monetary policy direction for 2025, following the recent easing of inflationary pressures.

UOB expects the Monetary Authority of Singapore (MAS) to slightly reduce the slope of the S$NEER policy band by 50 basis points in January 2025, bringing it down from 1.5% to 1% per annum, citing moderating inflationary pressures and a gradual return to price stability as the primary reasons for this adjustment.

"We view today’s reduction of the slope settings as an adjustment to anchor the pace of appreciation of the S$NEER towards a cyclically-neutral path. In other words, under our base case, we do not expect any further adjustments to the prevailing S$NEER slope settings for the rest of 2025," UOB stated.

The bank projects core inflation to average 1.7% in 2025, supported by a stable economic environment and easing global cost pressures.

Headline inflation, which stood at 1.9% in Q4 2024, is expected to remain within the official forecast range of 1.5-2.5%, with private transport costs being a potential upside risk.

Conversely, RHB believes that MAS will maintain its current policy stance through the first half of 2025, citing an entrenched disinflation trend and manageable inflation risks.

The bank argues Singapore's economic fundamentals remain resilient, supporting a wait-and-see approach before further policy adjustments.

RHB maintains a GDP growth forecast of 3% for 2025, at the upper end of the official range of 1–3%, driven by a global technology upcycle and robust domestic demand. Despite potential external risks, such as geopolitical tensions and trade disruptions, the bank remains optimistic about Singapore’s economic outlook.

For inflation, UOB maintains its forecast of 1.7% core inflation and expects headline inflation to stay within 1.5–2.5%, whilst RHB projects 1.8% core inflation and a headline rate of 2.3%, reflecting stable cost pressures across various sectors.

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