SINGAPORE – Brace yourselves! Singapore’s central bank is gearing up for a significant monetary policy shift, just days after US President Donald Trump unleashed the steepest tariffs seen in over a century, raising alarm bells about global trade.

Economists Predict Major Policy Change on April 14

In a recent Bloomberg survey, all 14 participating economists anticipate that the Monetary Authority of Singapore (MAS) will loosen its monetary settings by adjusting the policy band for the Singapore dollar on April 14. Currently, this policy uses the exchange rate to manage inflation rather than traditional interest rates.

What Does a Slope Reduction Mean for the Singdollar?

Lowering the slope of the policy band means the Singapore dollar will strengthen more slowly, giving the MAS a tool to stabilize the economy in light of global uncertainties. Since Trump's election victory in November, the dynamics have shifted, with the Singapore dollar appreciating about 2.9% against the US dollar this year.

Economic Growth at Risk: Experts Weigh In

Experts are sounding the alarm: "The global outlook has deteriorated significantly," states Khoon Goh, head of Asia research at Australia & New Zealand Banking Group, who expects the policy slope to hit 0%. With core inflation remaining below long-term levels, the MAS is reconcentrating on bolstering growth.

Singapore Faces Unique Challenges Amid Tariff Threats

Despite only facing a 10% tariff on exports to the US, Singapore's status as an export-dependent nation means it will still feel the pinch. Prime Minister Lawrence Wong has warned that the tariffs could significantly impact growth in 2025, potentially pushing the nation into recession.

Increased Chances for More Aggressive Easing

Citigroup analysts predict a growing likelihood of more aggressive easing measures from the MAS on April 14, with a measured approach of a 50 basis-point slope reduction as their baseline scenario. Compounding this, Barclays mentions the possibility of the MAS re-centring its policy band downward to allow for currency depreciation.

A Heavy Price of Tarrifs: Economic Growth Under Fire

UBS has estimated that the economic toll from these tariffs will hit Singapore particularly hard, only surpassed by Thailand in the region. Citigroup's Johanna Chua highlighted that close to 7% of Singapore’s GDP is driven by US spending, the second highest in Southeast Asia—putting the island nation in a precarious position with the new tariffs.

Experts Caution Against Speedy Slopes Flatline

As the MAS considers how drastic to shift its policy, experts warn that a sharp move to a zero slope could spook the markets. Selena Ling from OCBC Bank suggests a more gradual approach may be prudent, given ongoing economic uncertainties.