Singapore's interbank rates have risen to their highest point in more than a year, driven by tighter domestic liquidity and growing anticipation of additional US interest-rate increases that have lifted borrowing costs.

The cost of overnight borrowing in Singapore's interbank market increased 11.7 basis points to 1.7446% as of Friday, according to data released Tuesday. This marked the highest level since July 2025. Local markets were closed on Monday for a holiday.

Markets are preparing for the possibility of further tightening by the US Federal Reserve, which lifted its benchmark rate by 25 basis points in September before holding it steady in October. Meanwhile, the Monetary Authority of Singapore kept monetary policy unchanged in October after tightening in both April and July.

Liquidity in Singapore has also contracted as loan growth surpassed deposits. The loan-to-deposit ratio climbed to 69.8% in September, according to the latest central bank data, the highest since August 2024.