Singapore: Imported energy shock drives MAS stance – UOB

UOB’s Jester Koh highlights that MAS raised its 2026 core and headline inflation forecast ranges to 1.5–2.5% as imported energy costs surge. He stresses that higher Oil and gas prices will pass through to Singapore’s CPI via electricity, transport and goods. UOB has lifted its own 2026 inflation forecasts and sees risks tilted to the upside.

Higher energy costs lift inflation outlook

"On inflation, MAS raised both its 2026 core and headline inflation forecast ranges to 1.5–2.5%, from 1.0–2.0% in the Jan 2026 MPS. The policy statement also conveyed a greater degree of confidence in the inflation outlook than in growth."

"MAS noted that “even if supplies from the Middle East are restored, global energy prices are likely to remain elevated for some time,” as deliveries will be lagged, supply will take time to recover fully, and government efforts to rebuild energy reserves will add to pent-up demand. As a result, “prices for Singapore’s imported intermediate and final consumer goods” are forecast to rise."

"We have previously raised our 2026 headline inflation forecast to 2.0% (from 1.5%; 2027F: 2.2%) and core inflation to 1.9% (from 1.5%; 2027F: 1.9%), and noted that risks remain tilted to the upside. Spillover effects from higher utility, transport, and input costs on both goods and services inflation are likely to be meaningful."

"Under our baseline assumptions, we expect MAS to tighten monetary policy further at the Oct 2026 MPS via a 50 bps S$NEER band slope steepening to 1.5% p.a., with risks that the move could be brought forward to the Jul 2026 MPS."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)