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Commerzbank’s Charlie Lay notes Monetary Authority of Singapore (MAS) unexpectedly tightened policy for a second meeting, slightly increasing the Singapore Dollar (SGD) Nominal Effective Exchange Rate (NEER) slope and stressing the move was smaller than April’s. He says MAS is signalling greater concern over inflation risks than growth, with stronger-than-expected H1 2026 growth and forecasts likely to be revised up, while USD/SGD only slipped modestly to around 1.2890.
Second consecutive MAS tightening step
“In a surprise move, the Monetary Authority of Singapore (MAS) tightened monetary policy for the second consecutive meeting. It increased the rate of appreciation of the SGD NEER policy band “very slightly”, with no changes to the centre or width of the band. Importantly, MAS said that the increase was smaller than the tightening in April.”
“MAS could have easily left policy unchanged given that inflation remains relatively benign and energy prices have retreated from their April peaks.”
“Its decision to act signals that MAS remains more concerned about the upside risks to inflation than the downside risks to growth.”
“Growth was stronger-than-expected in H1 2026 at 6%. The official forecast is likely to be revised up from 2-4% currently.”
“MAS maintained its headline and core inflation forecasts at 1.5-2.5% for 2026. USD/SGD fell only modestly to around 1.2890 following the announcement.”
