Singapore Economics & Strategy: MAS Steepens "Very Slightly" and Keeps Door Open for More Tightening

Research evidence excerpt

Singapore Economics & Strategy: MAS Steepens "Very Slightly" and Keeps Door Open for More Tightening

Viewpoint |

27 Jul 2026 01:21:40 ET │ 17 pages

Singapore Economics & Strategy

MAS Steepens “Very Slightly” and Keeps Door Open for More

Tightening

Wei Zheng Kit AC

CITI'S TAKE +65-6657-5079

Despite downside surprises in 2Q26 core outturns, we believe MAS’s wei.zheng.kit@citi.com

decision to steepen “very slightly” today implies a greater weight on upside AC Rohit Gargsurprise in the positive output gap and the expected persistence of >2%

core inflation prints, consistent with its broadly defined price stability +65-6657-3471

mandate and historical reaction functions. While we think the hawkish tone rohit.garg@citi.com

of today’s statement shouldn’t necessarily be construed as forward AC Gordon Goh

guidance, the statement didn’t close the door to tightening. With the +65-6657-4150current 1.25% p.a. slope mildly restrictive, we pencil in no further tightening

for now. However, further upside surprises, especially in growth, could gordon.goh@citi.com

trigger additional tightening, with the mode of any tightening to hinge on

the extent of these surprises. Citi’s strategy team believes SGD NEER could

remain in tight range but could be better supported within the band going

forward. The path for front-end SG rates is likely higher but not without

resistance.

Economics View Summary — MAS steepened the slope "very slightly" by an

estimated 25bps to 1.25% p.a. broadly in line with Citi’s non-consensus call, amid

(a) “stronger than expected” 2Q26, with the “positive output gap is now forecast to

widen slightly in 2026" — upgraded from "averaging around zero percent" at the Apr

MPS; (b) despite downside surprises in 2Q26, core and an unchanged 2026 core