MAS eases monetary policy as core inflation forecasts drops to 1% to 2%

CPI-All Items inflation will average 1.5% to 2.5% in 2025.

The Monetary Authority of Singapore has eased monetary policy amidst expectations of slower growth and easing inflation in 2025.

MAS said it will ‘reduce slightly the slope of the S$NEER policy band.’ Singapore’s central bank also said there will be no change to the width of the policy band or the level at which it is centred.

MAS Core Inflation stepped down by more than expected to 1.9% year-on-year (YoY) in Q4 2024, from 2.7% in Q3.

The seasonally adjusted three-month/three-month rate of core inflation came in close to an annualised 1% for most of H2 2024, whilst core inflation excluding the impact from the GST hikes is estimated to have fallen below 1.5% YoY in Q4.

MAS said that overall, the pace of consumer price increases has moderated across a broad range of goods and services, and core inflation is presently low and stable.

Core inflation is now forecast to average 1% to 2% in 2025, lower than the 1.5% to 2.5% projected in October. MAS expects business cost- and demand-driven inflationary pressures to remain contained.

CPI-All Items inflation is forecast to average 1.5% to 2.5% in 2025, compared to 2.4% in 2024. Accommodation inflation is forecast to slow, partly offsetting an anticipated pickup in private transport inflation.