Singapore holds monetary policy, flags slowdown in second half of the year

Singapore kept its monetary policy steady as the export-dependent city-state grapples with trade concerns from the Trump administration.

The Monetary Authority of Singapore said it would hold the width and level at which its policy band is centered, while warning that GDP growth is “projected to moderate in the second half of 2025 from its strong pace in [the first half].”

“In particular, the trade-related sectors should see some pullback,” the central bank said in its monetary policy statement on Wednesday.

Unlike most nations, Singapore does not use interest rates to manage its monetary policy, but instead strengthens or weakens the Singapore dollar against a basket of its main trading partners in a policy band.

The exact exchange rate is not set; instead, the SGD can move within the set policy band, whose precise levels are not disclosed.

The move comes after the central bank had eased monetary policy twice earlier in 2025, and said that it is now “in an appropriate position to respond to risks to medium-term price stability.”

The decision comes after reported remarks by Deputy Prime Minister Gan Kim Yong that stated the U.S. was “non-committal” on whether the level of tariffs will remain at 10% for Singapore imports into the U.S.

Gan was in the U.S. from July 20 to 26, and he said that “the U.S. was not in the mood to discuss any discount to the baseline tariff.”

Singapore had been hit with the 10% levy despite running a trade deficit with the U.S. and having a free trade agreement since 2004.

The city-state has neither received a “tariff letter,” nor come to a trade deal with the U.S. since “Liberation Day” on April 2.

Singapore's economy is heavily dependent on exports, with exports making up 178.8% of the city-state's GDP in 2024, according to the World Bank.

Singapore's economy dodged a technical recession in the second quarter, with growth expanding at 1.4% quarter over quarter and defying expectations of a 0.5% contraction.

On a year-over-year basis, Singapore's GDP grew 4.3% in the second quarter, accelerating from 4.1% in the first three months and beating expectations.