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MAS Tightens Monetary Policy Again as Inflation Risks Persist

Published July 28, 2026 at 8:02 AM UTC

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The Monetary Authority of Singapore (MAS) has tightened monetary policy for the second consecutive quarter, allowing the Singapore dollar to strengthen further in a bid to curb persistent inflation. The central bank said core inflation is expected to stay elevated until early 2027, driven by ongoing global supply pressures and robust domestic demand. This move, announced in its latest quarterly policy statement, aims to anchor inflation expectations and prevent a wage-price spiral. For everyday Singaporeans, the stronger dollar means imported goods and groceries may become more affordable, but mortgage payments and business borrowing costs could rise as interest rates remain high. Export-oriented industries, especially electronics and pharmaceuticals, face headwinds as a pricier SGD makes their goods less competitive abroad. The MAS uses the exchange rate as its primary policy tool, a departure from most central banks that adjust benchmark interest rates. By allowing the SGD's nominal effective exchange rate (SGD NEER) to appreciate at a faster pace, MAS effectively tightens financial conditions. The decision comes as inflation has proven stickier than expected, with core inflation hovering around 5%. Higher transport, food, and housing costs continue to squeeze household budgets. The MAS now projects that core inflation will only gradually ease to around 2-3% by 2027, suggesting rate cuts are unlikely in the near term. Next, markets will watch for any signs of economic slowdown that could force a policy reversal, but for now, the central bank remains focused on taming price pressures.