Singapore May Bring Forward Monetary Easing as US Tariffs Set to Hit Growth

The inevitability of a global economic slowdown in the wake of US tariffs being imposed has raised expectations that Singapore's central bank will ease its local dollar policy stance in its next meeting likely on April 14.

- Ovais Subhani

Most analysts now believe that the Monetary Authority of Singapore (MAS) will further slow the pace of the local dollar's trade-weighted appreciation, referred to as the Singapore dollar nominal effective exchange rate (S$Neer). This is a shift in expectations from only a few days ago, when the consensus was that MAS would stay put until July.

The easing move will be in anticipation of a worldwide pullback in economic activity, investments and hiring after US President Donald Trump on April 2 announced a 10 per cent tariff on goods imported from Singapore, and much higher duties on other countries.

The 10 per cent baseline tariff for Singapore and other US trading partners around the world came into effect on April 5.

Describing Mr Trump's tariff policy as a seismic change in the rules-based global order, Prime Minister Lawrence Wong on April 4 said Singapore will take a bigger hit than others because of its heavy reliance on trade.

A day earlier, Deputy Prime Minister Gan Kim Yong had said that Singapore is reassessing its 2025 growth forecast, and is prepared to support households and businesses if the situation deteriorates.

HSBC's Asean economist, Ms Yun Liu, said: "While Singapore may have the least direct tariff risk in Asean, its trade openness and limited domestic market make it vulnerable to indirect trade risks."

Ms Liu said she is bringing forward her call for another MAS easing from July to April. Since inflation in Singapore is already on the decline, an easier MAS stance would support economic growth, she added.

A cheaper currency may help Singapore exports by mitigating some of the price impact from the new tariff. While the currency has eased a bit since the April 2 announcement, it still stands at 1 per cent higher versus the US dollar on a year-to-date basis.