Singapore Dollar: Inflation keeps MAS cautious – Commerzbank

Commerzbank’s Dr. Henry Hao and Moses Lim note that Singapore’s August headline and core inflation both climbed to the upper half of the Monetary Authority of Singapore’s 2026 forecast range, with services, retail goods, food and utilities all contributing. They argue wage pressures should moderate, allowing MAS to stay on hold in October unless energy-driven imported inflation or broader price pressures intensify, while USD/SGD has recently firmed.

MAS seen staying on hold

"August headline inflation rose 2.3% yoy vs 2.2% in July, matching market expectations. It marked the highest reading since July 2024 and accelerated for a third consecutive month. Core CPI, which excludes accommodation and private transportation, climbed to 2.2% yoy (Bloomberg consensus: 2.2%) vs 2.0% in July."

"Both headline and core inflation remained in the upper half of the Monetary Authority of Singapore's (MAS) 2026 forecast range of 1.5-2.5% for a second consecutive month."

"On monetary policy, although August inflation was firmer, it remained within MAS' forecast range. Additionally, wage pressures are expected to moderate in the coming months, reducing the urgency for further tightening by MAS. Unless inflation pressures broaden materially or the recent rise in global energy prices leads to a more persistent increase in imported inflation, MAS should have room to remain on hold at its next review in October."

"In FX, USD/SGD rose 0.4% to 1.2800 yesterday, closing at its highest level since 13 August due to broad dollar strength."

"Nonetheless, SGD remained the third best-performing Asian currency this year. Year-to-date, it is up 0.4% vs the USD compared to the average for Asian currencies ex-Japan of a 1.71% depreciation."