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We expect the Monetary Authority of Singapore to adopt a “wait-and-see” approach at its policy review on July 30. The Singapore economy averted a technical recession – real GDP growth expanded by a stronger-than-expected 1.4% QoQ sa in 2Q25 after a 0.5% contraction in 1Q25. However, the global outlook is uncertain due to the US extending its reciprocal tariff pause to August 1. Deputy Prime Minister Gan Kim Yong is leading a delegation to the US from July 20 to 26 to strengthen economic and commercial ties and negotiate tariffs, with a focus on securing pharmaceutical concessions.
We will be looking out for hints of a third easing at the October review, given the central bank’s base case scenario for global economic activity to slow due to US-led tariffs amid dampened inflation in H2 2025. The softer outlook suggests that the SGD NEER is currently strong, at 1.7% above the mid-point (as per our model), with scope to drift lower into the 0% to 1% range above its mid-point. However, USD/SGD has and should continue to be a price-taker in the context of the USD’s global weakness this year. Despite its rebound from the year’s low of 1.27 to 1.2882 in the first three weeks of July, USD/SGD has been drifting lower in a price channel (estimated around 1.2625-1.2850 this morning) since May.
The US Federal Reserve is also widely anticipated to keep the Fed Funds Rate at 4.25-4.50% at its July 30 FOMC meeting. At the ECB Forum in Sintra on July 1, Fed Chair Jerome Powell committed to a meeting-by-meeting approach where decisions will be data-dependent. Shortly before the meeting, the Bureau of Economic Analysis is expected to confirm that the US economy has averted a technical recession. The Atlanta Fed GDPNow model projected that US advance GDP will expand by an annualised 2.4% QoQ saar in 2Q25 after a 0.5% contraction in 1Q25. June’s nonfarm payrolls were stronger-than-expected at 147k vs. the 106k consensus, while May was revised to 144k from 139k. CPI inflation also rose to 2.7% YoY from 2.4% over the same period.
However, the decision to hold will unlikely be unanimous. Fed Governors Michelle Bowman and Christopher Waller – both appointed by US President Donald Trump – have publicly supported a rate cut next week. They were likely to be the couple of participants in the FOMC minutes who were open to a July cut. Focus has been on Trump’s “on again, off again” call for Powell’s removal and his desire for significantly lower interest rates. Nonetheless, markets will be looking out for hints of a September cut, an outcome with a 63% probability in the futures market. Trump’s repeated call for US rates to fall to 1%, below the ECB’s 2% rate, could be construed as an implicit desire for a weaker USD, which he has linked to restoring America’s manufacturing and trade competitiveness.
Quote of the Day
”God gives the nuts, but he does not crack them.”
Franz Kafka
July 25 in history
The Diary of Anne Frank was published in 1947.
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