Singapore's Central Bank Eases Monetary Policy as US Tariffs Impact Growth

As anticipated, Singapore's central bank eased its monetary policy for a second time this year, noting that expectations for global growth and trade have worsened due to U.S. tariffs, while the trade ministry reduced its growth outlook for the city-state.

The Monetary Authority of Singapore announced it would moderately lower the current rate of appreciation of its exchange rate-centered policy band referred to as the Nominal Effective Exchange Rate, or S$NEER.

It stated that the width and the position where the band is centered remained the same.

The central bank indicated that countries exporting goods affected by tariffs will experience reduced demand and pressure to decrease their prices, while simultaneously; global financial conditions have become stricter as asset markets begin to reevaluate risks in the worldwide economy.

"These factors will exert widespread and potentially reinforcing drags on production, trade, and investments in Singapore's major trading partners," the MAS said.

Economists indicated they wouldn't dismiss the possibility of further easing in the year's second half if economic conditions worsen, considering the central bank's dovish statements. Analysts surveyed by Reuters largely anticipated that the MAS would ease monetary policy by lowering the slope of the band that permits the S$NEER to fluctuate.