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While the US Federal Reserve cut rates in September and signalled further reductions, local rates may not fall much further. Still, the lower-for-longer environment brings relief to households and businesses. Mortgage rates have declined from peaks of 4.5 per cent in 2022 to below 2.5 per cent, easing repayment burdens and boosting disposable income. Rising asset values also support consumption, though savers may feel the squeeze as deposit rates fall.
For companies, cheaper borrowing encourages expansion, especially in trade-related sectors that are front-loading exports ahead of potential US tariffs. Construction firms and larger corporates benefit most, though SMEs may struggle to access lower rates due to collateral and credit constraints.
Despite these positives, Singapore’s economic outlook remains clouded by external risks. The US faces slowing job growth, sticky inflation, and fears of stagflation, while China remains in deflation. Trade tensions, particularly tariff changes under US President Donald Trump, threaten global demand and complicate business planning.
Domestically, policymakers have expanded financing support and slowed currency appreciation to cushion the economy. However, Singapore’s growth momentum is expected to moderate, with 2026 posing greater uncertainties. Lower interest rates ease short-term strains, but global developments will ultimately shape the city-state’s trajectory.