SINGAPORE: MAS Unchanged, In Wait & See Mode On Global Outlook

The MAS left policy settings unchanged at the July meeting, which was in line with the sell-side consensus, along with more elevated NEER levels (relative to the top side of the policy band) compared to the Jan and April meetings (where the central bank eased). The tone of the MAS statement suggests it is in wait and see mode, particularly around trade/external risks (see this link for the full statement). 

• The central bank noted Q2 GDP growth was better than forecast, while the global backdrop has also been more resilient than anticipated. Growth conditions are expected to moderate as we progress through H2 though (with front loading of trade activity, which support H1 growth, likely to wane), while the 2026 outlook carries considerable uncertainty. MAS notes: "Changes in effective tariff rates worldwide could impact the performance of Singapore’s externally-oriented sectors. Renewed trade conflict, financial or geopolitical shocks would also exacerbate the drags posed by the global slowdown, and in turn weigh on domestic GDP growth." 
• On inflation, the central bank expects the current generally benign backdrop to persist, noting: "MAS Core Inflation is projected to edge up slightly from the later part of 2025, as the disinflationary impact of enhanced healthcare subsidies introduced late last year, as well as that of the global oil price decline, tapers. For 2025 as a whole, MAS Core Inflation and CPI-All Items inflation are forecast to average 0.5–1.5%." (This forecast on core inflation is unchanged from the April meeting. It notes upside and downside inflation risks for the outlook).
• The central bank concluded: "The global and domestic economies have been resilient thus far. GDP growth in Singapore is expected to slow in H2, with the level of output falling slightly below potential. However, for 2025 as a whole, the output gap is projected to average around zero percent."
• This leaves the door ajar for further easing at the October policy meeting (most likely via reduced SNEER appreciation), as any downside surprises on growth will likely push the output gap weaker and weigh on core inflation pressures.
• On balance this appears the greater risk, although a status quo outcome into year end can't be ruled out if global/external conditions hold up and we don't further downside in core inflation pressures.