Commercial buildings glow at dusk in Singapore on Monday, Feb. 2, 2026. Photographer: SeongJoon Cho/Bloomberg via Getty Images
Bloomberg | Bloomberg | Getty Images
Singapore tightened monetary policy on Monday for the second straight time, taking a preemptive step to guard against another jump in oil prices even as domestic inflation remains relatively muted.
The Monetary Authority of Singapore said it would raise the pace of appreciation in the Singapore dollar’s nominal effective exchange rate policy band “very slightly,” noting that the move was smaller than its April adjustment. The central bank left both the width of the band and its midpoint unchanged.
The MAS operates differently from many major central banks: instead of using interest rates as its main policy tool, it manages the Singapore dollar against a trade-weighted basket of currencies within a policy band that is not publicly disclosed.
“In an environment of continued heightened uncertainty, this calibrated adjustment to the policy stance builds on the tightening in April,” the MAS said in its statement.
Core inflation in Singapore, which strips out accommodation and transportation costs, rose to 1.6% in June from 1.4% in May. That placed it near the lower end of the MAS’s 1.5% to 2.5% forecast range for the year, while headline inflation stood at 1.9%.
BMI, a Fitch Solutions company, said transportation fuel prices climbed quickly after the start of the U.S.-Iran conflict. However, weaker services inflation — especially in healthcare, communications and education — helped cushion much of the broader price impact.
“Imported-cost pressures typically pass through to broader consumer prices with a lag, so we still expect inflation to rise in the coming months,” the intelligence group said.
Singapore’s near-total reliance on imported energy leaves it exposed to higher oil prices.
Brent crude climbed back above $100 a barrel last week after Houthi militants attacked two Saudi tankers in the Red Sea, deepening a supply threat that had eased before the collapse of the Middle East ceasefire.
The economy has so far shrugged off the turmoil as AI demand powers electronics exports.
Singapore’s gross domestic product expanded 5.7% in the second quarter from a year earlier, beating the 5.5% median estimate in a Reuters survey and well above the government’s full-year projection of 2%–4%.
