Singapore tightens monetary policy for second time in three months as oil prices raise inflation risks

Singapore tightened monetary policy on Monday for the second time in three months, saying imported costs and inflation risks are likely to increase as global energy markets remain volatile.

The Monetary Authority of Singapore said it would raise the rate of appreciation of the Singapore dollar’s trade-weighted value. MAS manages inflation mainly through the exchange rate rather than by setting interest rates.

The central bank said imported costs are likely to rise in the coming quarters. It forecast that core inflation would increase in July and remain elevated into early next year.

MAS said inflation could rise more sharply than expected if energy prices increase again. It said fuel reserves had been drawn down significantly and that renewed supply disruptions in the Middle East could lead to sharp increases in oil prices.

Singapore imports most of its needs, so higher global food and energy prices can feed directly into local living costs. A stronger Singapore dollar can reduce the effect of rising import prices.

MAS last tightened monetary policy in April, which was its first such move since 2022.