MAS increased the slope of S$NEER appreciation "very slightly"; outlook data/event dependent

Research evidence excerpt

MAS increased the slope of S$NEER appreciation "very slightly"; outlook data/event dependent

vernment’s 2-4%, which we expect to be raised by the MTI in

August.

… and still forecasts core inflation of 1.5-2.5% this year

The MAS retained its 2026 forecast range but expects core inflation to “step up” in July

and “remain elevated into early next year, before easing “more discernibly” in H2 2027 as

global energy prices moderate. The MAS remains cautious about imported inflation,

particularly the pass-through from higher energy prices and electronic input costs to

upstream items. However, the MAS argued that domestic price pressures will be

“contained,” citing moderating wage growth, as well as sustained labor productivity growth.

Still, the MAS warned that the risk could be more persistent inflation due to greater

demand spillovers and indirect effects. Our view remains that second-round effects could

be large due to the more positive output gap and fairly stable labor market conditions. We

continue to forecast core inflation to rise substantially in the comings months (Figure 1),

bringing full-year 2026 average to 2.1% (see AsiaInsights-Singapore:Thepickupin

Junelikelymarksthestartofasustainedriseincoreinflation, 23 July 2026).

Still-strong IP growth in June

IP growth moderated to a still-strong 7.2% y-o-y in June (Consensus: 9.3%; Nomura: 12.4%)

from an upwardly revised 17.8% in May (from 13.0%). IP growth in June was still supported by

double-digit growth in electronics output and in precision engineering (Figure 2), reflecting

sustained broadening AI-related demand (see FirstInsights-Singapore:NODXgrowthheld

upinJune, 17 July 2026), despite easing from the previous month. By contrast, growth in

biomedical and chemicals output remained weak, causing some modest offset.