By Jun Yuan Yong
SINGAPORE, April 9 (Reuters) – Singapore is poised to tighten monetary policy at a review next week, with the Middle East war driving up energy prices, stoking inflation and darkening the growth outlook at home and abroad.
Out of 13 analysts polled by Reuters, 11 expect the Monetary Authority of Singapore (MAS) to tighten policy on April 14. MAS left settings unchanged in January this year, as well as in July and October last year after easing in January and April.
While oil prices slid below $100 per barrel on Wednesday after the U.S. and Iran agreed to a two-week ceasefire, uncertainty remains around energy costs and the impact of supply chain disruptions.
Standard Chartered chief economist Edward Lee said that MAS must walk a fine line between higher imported energy costs and a murkier growth outlook, noting that even production in outperforming sectors such as electronics remain vulnerable to supply disruptions in critical materials such as helium.
“On balance, we expect the MAS to first partially remove 2025’s pre-emptive easing and then assess the evolving Middle East situation,” he said.
Maybank economist Chua Hak Bin said: “We expect the MAS to tighten via a steeper appreciation bias at the April meeting, given the upside risks to inflation from the Gulf crisis and stronger GDP growth relative to potential over the past year.”
The U.S. Energy Information Administration said on Tuesday that full restoration of oil flows through the strait will take months even after the war ends, keeping prices elevated until flows resume fully and Middle Eastern producers return to normal output.
Singapore’s 2025 GDP rose 5.0%, compared to a preliminary reading of 4.8% and growth of 5.3% in 2024. Advance estimates for growth in Q1 are also expected on April 14.
The government introduced a support package in parliament on Tuesday worth almost S$1 billion ($780 million) to offset the economic impact of the Middle East conflict.
Trade minister Gan Kim Yong told parliament that early data showed that economic activity continued to be resilient in the first quarter of 2026.
“However, growth in the coming quarters is likely to be affected by the ongoing conflict,” he added.
He said Singapore’s overall inflation could be higher than earlier projected as the war has driven up global energy and commodity prices.
Singapore manages monetary conditions by letting the local dollar rise or fall against the currencies of its main trading partners within an undisclosed trading band, known as the Singapore dollar nominal effective exchange rate (S$NEER).
It adjusts settings via three levers: the slope, mid-point and width of the band.
Policymakers are treading carefully as they worry the energy shock from the war could reignite price pressures just as inflation had begun to cool.
Australia’s central bank raised rates in March for a second straight month over concerns of “material” risk to inflation.
The Bank of England and the Federal Reserve held rates steady in March but warned of upside risk to inflation, prompting markets to read their tone as hawkish.
(Reporting by Jun Yuan YongEditing by Shri Navaratnam)
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