MAS Tightens Policy, Lifts 2026 Inflation Forecast

The Monetary Authority of Singapore tightened monetary policy and revised its inflation forecasts upward for 2026, lifting both core and headline inflation projections to a range of 1.5 to 2.5 per cent from the prior 1 to 2 per cent. The half-percentage-point shift in the forecast band signals that MAS expects price pressures to persist at a higher level than its previous assessment indicated. MAS conducts monetary policy through the exchange rate rather than interest rates, managing the Singapore dollar nominal effective exchange rate within an undisclosed policy band. A tightening move typically means allowing the currency to appreciate at a faster pace or on a steeper slope, which acts to dampen import costs and curb domestic inflation. Businesses with significant import exposure and consumers facing elevated living costs are the primary cohorts affected by this dual shift in both policy stance and price guidance. Markets will now watch for how quickly exchange rate appreciation transmits into consumer prices and whether the revised band holds through mid-2026.