Singapore's Strategic Shift: Easing Monetary Policy Amid Tariff Tensions

Singapore is likely to further ease monetary policy as U.S. tariffs impact its export-driven economy. Analysts expect adjustments to the Singapore dollar nominal effective exchange rate. Economists predict reduced growth forecasts, while some still hold a positive outlook despite challenges.

In a bid to navigate choppy economic waters, Singapore's central bank is poised to ease monetary policy. This move comes in response to U.S. tariffs that pose a threat to Singapore's export-driven economy, casting a shadow over the city-state's growth prospects.

The Monetary Authority of Singapore (MAS) is expected to adjust the Singapore dollar nominal effective exchange rate, or S$NEER, rather than interest rates. This change would represent a further loosening of the policy, following a similar action in January. A Reuters poll found that nine out of ten analysts predict this outcome.

With the threat of global economic slowdown looming, Lee Yen Nee from Fitch Solutions' BMI unit believes the latest tariffs could shave off around 1% of Singapore's growth. Meanwhile, some economists maintain cautious optimism, hoping for potential easing of tariff pressures in the latter half of the year.

(With inputs from agencies.)