Market Outlook: Singapore Monetary Authority May Keep Monetary Policy Settings Steady This Month

HSBC economists believe that the Monetary Authority of Singapore (MAS) may keep its monetary policy settings unchanged in January despite the decline in inflation. They note that MAS, considered Singapore's central bank, appeared less committed to the current monetary policy in its October meeting and has not signaled any changes this year. The MAS's outlook for Singapore's growth in 2025 is not as bright as that for 2024, and there is still uncertainty in U.S. trade policy under the Trump administration. Potential tariffs pose downward risks to the city-state's growth. HSBC's baseline scenario suggests that, given the stability in core inflation, MAS is likely to remain on hold in 2025; however, if inflation decreases more rapidly than expected, an earlier move may be required. Unlike most central banks, MAS focuses on the Singapore dollar as an effective tool for maintaining price stability in the small and open economy.