The Monetary Authority of Singapore (MAS) kept all three settings of its Singapore dollar nominal effective exchange rate (S$NEER) policy band unchanged: the pace of appreciation, the band's width, and its midpoint. MAS announced the decision in its October 2026 Monetary Policy Statement, published on 14 October 2026.
According to MAS, the currency is now trading in the top half of the band, having gained a little ground since the July 2026 review, when MAS slightly increased the band's rate of appreciation. For 2027, MAS wants price pressures to cool gradually, and it is counting on a firmer currency to help: keeping the upward slope lets the S$NEER keep rising, which MAS argues will push back against the imported inflation it expects in the near term.
How MAS runs monetary policy
Unlike most central banks, MAS does not steer the economy through an interest rate. MAS explains that trade, at more than 300% of GDP, counting gross exports and imports, makes Singapore's prices far more sensitive to the currency than to borrowing costs. So the policy tool is the S$NEER: the Singapore dollar measured against a basket of its trading partners' currencies, weighted by trade. This time it left all three alone.
Growth: AI is doing the heavy lifting
Worldwide spending on artificial intelligence (AI) is keeping factories and trade busy, above all in Asia, and MAS says demand from Singapore's main trading partners has held up well as a result. At home, growth of 1.1% in the third quarter of 2026, measured against the previous quarter and adjusted for seasonal swings, was a touch below the second quarter's pace; on a year-on-year basis, GDP was up 5.4%, with tech-related industries leading. Both figures are advance estimates from the Ministry of Energy, Trade & Industry (METI), as cited by MAS.
METI is due to publish official GDP growth forecasts for 2026 and 2027 in November. MAS's view is that strong order books for AI products and added production capacity will support steady growth through the next few quarters, before the AI-driven lift fades in the second half of 2027. It also judges that the economy is running above its potential this year, a gap it expects to shrink over 2027.
Inflation: higher for now, easing from mid-2027
Core inflation has picked up. MAS Core Inflation, which excludes accommodation and private transport costs, reached 2.1% year on year in July and August, up from 1.5% in the second quarter, while food inflation rose from 1.9% to 2.2%. MAS points to pricier imports spreading across more of the shopping basket, from electricity and gas bills to fuel-intensive transport services. Services bucked the trend. Larger state subsidies for healthcare and fiercer price competition among telecoms providers kept inflation there below MAS's projection.
For 2026 as a whole, MAS forecasts headline CPI-All Items inflation around 2.0% and MAS Core Inflation averaging 1.5% to 2.0%. Next year both measures are projected to average 1.5% to 2.5%, with core inflation easing more noticeably from mid-2027.
The risks MAS is watching
On balance, MAS sees inflation as more likely to surprise on the high side, against an outlook it says is still highly uncertain. Two things could push it up. One is a wider spillover from the AI boom at home, with unit labour costs climbing faster. A lasting, steep jump in world energy or food prices is the other, as it would raise Singapore's import bill beyond MAS's forecast. Pulling the other way, slower growth, and with it lower inflation, could follow a bigger rise in interest rates than expected or a sharper fall in AI investment. A sooner rebound in Middle East energy output and shipments than MAS has projected would also mean a deeper drop in energy prices.
Why it matters
For financial institutions in Singapore, a steadily appreciating currency band is the backdrop for treasury, funding and foreign exchange risk planning into 2027. A stronger Singapore dollar lowers the local cost of imports but weighs on the value of foreign currency assets and revenues reported in Singapore dollars, which matters for asset managers, private banks and corporates with large offshore books. The statement also signals that MAS sees today's inflation as largely imported and temporary, and that it is prepared to act if medium-term price stability is threatened.
The decision lands as Singapore works to strengthen its position as a financial centre, from MAS's measures to anchor asset managers to its S$220 million commitment to fintech innovation.
Read the full MAS Monetary Policy Statement.
