DBS Group Research anticipates that the Monetary Authority of Singapore (MAS) will implement a slight increase in the slope of the Singapore Dollar Nominal Effective Exchange Rate (SGD NEER) policy band at its October review, while maintaining the width and centre of the band unchanged [1]. This expectation is based on ongoing import cost pressures and resilient economic growth, which favor a calibrated tightening approach rather than a more aggressive policy adjustment, aligning with the broader global monetary policy environment [1].
The research team, led by Taimur Baig, projects that the advance GDP estimates for the third quarter of 2026, which are scheduled to be released alongside the MAS policy decision, will indicate another period of robust growth. Specifically, DBS forecasts Q3 2026 GDP growth at 5.4% year-on-year (1.4% quarter-on-quarter seasonally adjusted), following a 5.9% year-on-year (1.4% quarter-on-quarter seasonally adjusted) increase in Q2 2026 [1]. The strong economic performance is attributed to artificial intelligence (AI)-driven trade activity, which has bolstered the manufacturing and wholesale trade sectors, as well as continued strength in the financial sector supporting the modern services cluster [1].
Despite this overall resilience, the report notes a moderation in the transport and storage sector and ongoing weakness in consumer-facing food services and retail sectors [1]. DBS reiterates its expectation for only a slight increase in the SGD NEER policy band slope, emphasizing that the width and centre of the band are likely to remain unchanged at the upcoming MAS review [1].
CONCLUSION
DBS Group Research expects the MAS to pursue a modest tightening of its SGD policy stance in October, reflecting persistent import cost pressures and strong economic growth. The anticipated policy move is supported by robust Q3 2026 GDP projections, driven by AI-led trade and financial sector strength, despite some sectoral weaknesses. Market participants are likely to interpret the MAS's approach as a measured response to current economic conditions.