Singapore Central Bank Tightens Policy on Inflation

Singapore's central bank tightened its monetary policy on April 14, becoming the first in Asia outside Japan to respond to rising inflation pressures from the ongoing Middle East conflict, as surging energy prices threaten to push up import costs in the trade-dependent economy.

The Monetary Authority of Singapore adjusted its policy by slightly increasing the slope of the Singapore dollar nominal effective exchange rate band, a measure that guides the local currency to appreciate more quickly against a basket of trading partners' currencies. The bank left the band's width and center position unchanged. This move aims to strengthen the Singapore dollar, making imports cheaper and curbing imported inflation, which has intensified due to higher crude oil, natural gas and fuel prices linked to the conflict involving Iran, Israel and the United States.

In its statement, the MAS raised forecasts for both headline and core inflation to 1.5 to 2.5 percent for 2026, up from the previous range of 1 to 2 percent. Core inflation, which excludes accommodation and private transport costs, stood at 1.4 percent year-on-year in February, before the conflict escalated in late February. The...