Singapore MAS Tightens Policy; Inflation Risks Rise

MAS cited the Iran war-fueled energy shock as a primary driver for potential core inflation increases, despite a 0.3% quarter-on-quarter economic contraction in Q1 2026, according to preliminary government data. The central bank raised its core and headline inflation forecasts for 2026 to 1.5%–2.5% from the previous 1.0%–2.0%.

MAS stated that GDP growth in Singapore will slow this year, with the output gap averaging around 0%. Maybank economist Chua Hak Bin indicates MAS leaves open the possibility of another tightening move in July, depending on inflation and growth evolution.

Standard Chartered chief economist Edward Lee characterized MAS's action as measured, highlighting the challenge central banks face balancing higher prices and growth. The government announced a support package worth almost S$1 billion ($785 million) to mitigate the economic impact of the conflict.