Singapore’s central bank eased its monetary policy for the second time, citing a deteriorating global economic environment and persistently subdued inflationary pressures. The Monetary Authority of Singapore (MAS) announced on Monday that it would continue to allow a modest and gradual appreciation of the Singapore dollar nominal effective exchange rate (S$NEER) band, but would reduce the rate of appreciation slightly.

The width of the policy band and the level at which it is centered will remain unchanged. All 10 economists surveyed by The Wall Street Journal had anticipated the move, which reflects growing concerns over weak external demand and downside risks to inflation.

“Amid the weakening external outlook, Singapore’s output gap will turn negative,” the MAS said in its statement. The central bank also noted that imported and domestic cost pressures are expected to remain low, forecasting that MAS Core Inflation will stay well below its 2% target. The balance of risks to inflation is now tilted to the downside, it added.

In line with the policy shift, the MAS revised its core inflation forecast for 2025 downward to 0.5%-1.5%, compared to 1.0%-2.0% in its January forecast. It also cut the projection for headline inflation to 0.5%-1.5%, from a previous estimate of 1.5%-2.5%.

Unlike most central banks that target interest rates, the MAS manages monetary policy by adjusting the exchange rate, reflecting Singapore’s high dependency on trade. The move highlights the city-state’s efforts to maintain stability and support growth in an increasingly uncertain global economic landscape.