Will MAS ease in October?
The desk anticipates that the Monetary Authority of Singapore (MAS) may consider further easing in October, driven by recent trends in inflation and export performance. Per the full note from MUFG EMEA, inflation has shown signs of easing, while export momentum is weakening, raising questions about the MAS's next steps. The desk highlights that the MAS's previous decisions to ease policy twice this year reflect a proactive approach to managing economic conditions. With no high-impact events on the calendar, market participants will closely monitor MAS's upcoming policy meeting for any signals regarding future easing.
What the desk is arguing
The MAS is likely to reconsider its monetary stance at the upcoming October meeting, with easing becoming a plausible outcome. Given the easing inflationary pressures and waning export momentum, the MAS may opt for further measures to support economic growth and stability.
Despite previous stability in policy, the changing economic landscape indicates a shifting risk profile. An anticipated easing could align MAS policy with current market conditions, fostering greater liquidity and potentially placing downward pressure on the Singapore dollar.
Where it sits in our coverage
Currently, our consensus target for the Singapore dollar stands at 1.075, within a range of 1.04 to 1.12. This perspective aligns with the observation of current economic indicators suggesting potential easing by the MAS.
Specific firm targets substantiate our outlook. For instance, Barclays, JPMorgan, and MUFG have projected the following Dec-26 targets:
How other firms see it
While many firms anticipate an easing from MAS, some key players remain skeptical. For instance, BofA holds a contrary stance, suggesting that the central bank may not need further adjustments given their outlook on persistent inflationary risks. In contrast, firms like JPMorgan agree with the likelihood of easing, reinforcing our aligned view.
- Aligned stances:
- JPMorgan
- Contrary stances:
- BofA
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01MAS likely to ease in October as inflation subsides.
- 02Weak export momentum supports the case for further policy adjustments.
- 03The Singapore dollar could face downward pressure if easing occurs.
Market implications
Further easing from MAS could lead to a depreciation of the Singapore dollar, impacting currency pairs with potential volatility spikes. Traders should watch economic indicators closely ahead of the announcement to position themselves effectively.
Risks to this view
The primary risk involves unexpectedly high inflation data or a stronger-than-anticipated economic performance, which could deter MAS from further easing. Additionally, external factors such as global market movements and trade dynamics could also impact the Singapore dollar and influence MAS's policy decisions.
Welcome to the MUFG Global Markets Asia podcast with Lloyd Chan, Senior Currency Analyst with the MUFG Global Markets Asia Research Team. Today is Tuesday, 7 October 2025, and joining Lloyd to pose some questions on the upcoming MES policy meeting is Jamie Sukakoshi, Head of FX Sales, Global Clients Singapore. The following podcast is for informational purposes only.
It is intended for professional investors and eligible counterparties, and not for retail clients. Any content should not be regarded as an offer to conduct investment businesses or investment recommendations. Okay, afternoon Lloyd.
So after easing twice this year, MES kept its monetary policy unchanged in July. Since then, inflation has eased, and export momentum is showing signs of weakness. So let's start with the big question on everyone's mind.
Will MES ease in October? Good afternoon Jamie. The short answer is probably not.
MES held its policy steady in July, and we expect a similar outcome at the 14 October meeting. While inflation has continued to ease and export momentum is softening, the central bank is signalling a reactive rather than pre-emptive stance. That means they are watching the macro data very closely, but likely not rushing to act unless there is clear evidence of economic deterioration.
Singapore's economy is still showing some resilience. The average industrial production level in July and August was still 3.2% higher than in Q2. While Trump's higher reciprocal tariff on Singapore's trading partners have come into play in August, Singapore's re-exports were still higher in August than the Q1 average.
Non-oil domestic exports have been on the weaker side though, mainly driven by non-electronics shipping. This warrants policy vigilance on how global trade will evolve in the coming months. Meanwhile, the unemployment rate remains low at 2%.
So unless Q3 GDP surprises to the downside, MES is likely to keep the SING dollar nominal effective exchange rate parameters unchanged in October. Do keep an eye on Q3 and Q4 GDP data where any downside surprise could shift the policy tone heading into 2026. Also recall that MES had already delivered policy easing in January and April, so there is now a sense that some policy accommodation has already been delivered.
On the inflation front, the picture remains big nine, with core CPI slowing to just 0.3% year-on-year in August. However, it may not be enough for MES to resume policy easing in October. Deadline CPI inflation averaged 0.8% year-on-year in the first 8 months of this year, while coin inflation averaged 0.6%.
Sources & References
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