The Monetary Authority of Singapore (MAS) has slightly reduced the Singapore Dollar Nominal Effective Exchange Rate (S$NEER) slope by an estimated 50 basis points, according to a report by Maybank IBG Research. This decision comes as core inflation shows signs of easing and growth momentum is expected to slow. December’s manufacturing output saw a robust increase of 10.6%, attributed to frontloading in anticipation of rising trade barriers.
The report suggests that another slope easing could occur in April or July, as the policy stance remains tight. Maybank IBG Research anticipates Singapore’s GDP growth for 2024 to exceed initial estimates, reaching 4.2%. Furthermore, the core inflation forecast for 2025 has been adjusted downwards to 1.4%.
Hak Bin Chua, an economist at Maybank, noted the significance of the manufacturing surge, stating, “Dec manufacturing output grew by a strong +10.6%, boosted by frontloading in anticipation of rising trade barriers.” This highlights the proactive measures taken by manufacturers to mitigate potential disruptions.
The easing of the S$NEER slope is a strategic move by MAS to balance inflationary pressures and economic growth. As Singapore navigates the complexities of global trade dynamics, these adjustments aim to sustain economic stability. Looking ahead, the potential for further policy easing underscores the need for continued vigilance in response to evolving economic conditions.
