Singapore Tightens Monetary Policy Amid Housing Boom

The Monetary Authority of Singapore (MAS) surprised markets by steepening the slope of its Singapore dollar nominal effective exchange rate (S$NEER) policy band at its January review, effectively tightening monetary conditions for the first time since January 2025.

The decision came in response to rising inflationary pressures, particularly in the housing sector where private residential property prices have risen 12% over the past year. The government simultaneously announced additional cooling measures, including higher stamp duties for foreign buyers.

Singapore's core inflation remained elevated at 3.1% in January, above the MAS's target range, driven by housing costs, private transport, and food prices. GDP growth of 4.2% in 2025 was the strongest in three years.

The Singapore dollar strengthened 0.4% against the US dollar to 1.3280 on the announcement, and the Straits Times Index fell 0.6% as banks and property developers underperformed.

"Singapore is in a fundamentally different position from most Asian economies," noted Priya Sharma. "Strong growth, asset price inflation, and capital inflows justify a tighter policy stance, even as peers like Australia and Korea are preparing to ease."