Citibank's Wei Zheng Kit said in a report that the risk of the Singapore Monetary Authority tightening monetary policy may have increased. Although the city-state's core inflation rate in November was below average expectations, the economist predicts that the country may experience a positive output gap that exceeds expectations in 2025 — an indicator of whether the economy is running close to full capacity. However, Citi's basic forecast is that the Singapore Monetary Authority will keep its policy unchanged in 2026, given that the labor market may be weak and the core CPI is expected to be slightly below average. Since the scale of trade flows far exceeds Singapore's domestic economic activity, the Monetary Authority of Singapore uses the exchange rate as a policy tool to manage inflation expectations and support growth.

Citibank's Wei Zheng Kit said in a report that the risk of the Singapore Monetary Authority tightening monetary policy may have increased. Although the city-state's core inflation rate in November was below average expectations, the economist predicts that the country may experience a positive output gap that exceeds expectations in 2025 — an indicator of whether the economy is running close to full capacity. However, Citi's basic forecast is that the Singapore Monetary Authority will keep its policy unchanged in 2026, given that the labor market may be weak and the core CPI is expected to be slightly below average. Since the scale of trade flows far exceeds Singapore's domestic economic activity, the Monetary Authority of Singapore uses the exchange rate as a policy tool to manage inflation expectations and support growth.