Singapore Economic News

Singapore Needs to Be on Guard for an Inflation Lift, Central Bank Chief Says

By Andrea Tan  and Chanyaporn Chanjaroen
October 25, 2017, 5:00 AM GMT+8

Singapore’s central bank chief said while inflation is still well below the historical average, policy makers need to be proactive if a stronger economy results in a pickup in price pressures.

Inflation will climb at some point if economic growth continues to strengthen, and under those circumstances, the central bank -- like others around the world -- needs to be forward-looking, Ravi Menon, managing director of the Monetary Authority of Singapore, said in an interview at the bank’s headquarters in the city on Tuesday.

“Our track record shows that we are keenly focused on inflation, keeping inflation under control,” he said. “And as long as inflation remains benign, the current policy stance has been appropriate.”

“Being proactive has been our track record for the last 40 years, it is not going to be different this time around,” he said.

More details in https://www.bloomberg.com/news/articles/...menon-says

(25-10-2017, 12:19 PM)cyclone Wrote: Singapore Needs to Be on Guard for an Inflation Lift, Central Bank Chief Says

By Andrea Tan  and Chanyaporn Chanjaroen
October 25, 2017, 5:00 AM GMT+8

Singapore’s central bank chief said while inflation is still well below the historical average, policy makers need to be proactive if a stronger economy results in a pickup in price pressures.

Inflation will climb at some point if economic growth continues to strengthen, and under those circumstances, the central bank -- like others around the world -- needs to be forward-looking, Ravi Menon, managing director of the Monetary Authority of Singapore, said in an interview at the bank’s headquarters in the city on Tuesday.

“Our track record shows that we are keenly focused on inflation, keeping inflation under control,” he said. “And as long as inflation remains benign, the current policy stance has been appropriate.”

“Being proactive has been our track record for the last 40 years, it is not going to be different this time around,” he said.

More details in https://www.bloomberg.com/news/articles/...menon-says

Though theory wise lots of quantitative easing globally should have a hyperinflatory effect, it seems such is not the case yet as OECD countries are struggling to have inflation of any sort. 

Seriously doubt economic growth would really strengthen to any extent. China is the main growth driver and are slowing down already and probably reaching their debt limits. And USA just keep increasing their debt as well whilst Japan is going towards its third "lost decade"

MAS dun need to do anything, if anything the "hyperinflation" in assets like stocks and property will continue whilst the rest of the economy just goes sideways.

Singapore Malls' Amazonian Emptiness
https://www.bloomberg.com/gadfly/article...k-de-grace

In Singapore's context, it is called the tabao/Lazada emptiness.

I seriously think that we are in a very big property bubble. Rents will be falling and given the financial engineering valuers have helped REIT managers to perform to go on a debt binge; the fall in rental and rising vacancies is going to trigger a massive equity raising.

(25-10-2017, 07:45 PM)CY09 Wrote: In Singapore's context, it is called the tabao/Lazada emptiness.

I seriously think that we are in a very big property bubble. Rents will be falling and given the financial engineering valuers have helped REIT managers to perform to go on a debt binge; the fall in rental and rising vacancies is going to trigger a massive equity raising.

I agree with the big property bubble. However there is a lot of liquidity sloshing around even locally, so those massive equity raising may actually happen and succeed thus dragging things on... Unless there is an external shock from the major world economies, the painful scenario of REITs having to liquidate is a risk many players are mispricing.

Just wait for the rate rises to happen and the REITs to tank, then see those so called "dividend" / passive income investors that buy a crapload of REITs run

How can there be inflation if there is an abundance of everything...?

The basic tenet of inflation is "too many money chasing too few goods".

We can have an oversupply/abundance of something with inflation if the growth of money is faster than the growth of goods.
It is visible that has happened globally as the 3 central banks did QE. This meant money pushed into the system.

For me the question now is what happens when the 3 central banks have to claw back the liquidity they injected.

(25-10-2017, 06:57 PM)Behappyalways Wrote: Singapore Malls' Amazonian Emptiness
https://www.bloomberg.com/gadfly/article...k-de-grace

This article is too pessimistic. Even with Alibaba taobao popularity, China malls are doing ok.
A country that leapfrog tech and even hawker uses e-payment services.

Furthermore SG malls reits are only 45% max in gearing. SG households and many property companies will have to fall before reit does.  

(26-10-2017, 11:41 AM)CY09 Wrote: The basic tenet of inflation is "too many money chasing too few goods".

We can have an oversupply/abundance of something with inflation if the growth of money is faster than the growth of goods.
It is visible that has happened globally as the 3 central banks did QE. This meant money pushed into the system.

For me the question now is what happens when the 3 central banks have to claw back the liquidity they injected.

Using US's QE for example.

My understanding is this -

The bear/recession is still not here is precisely because there is hardly any inflation. The banks prefer to park their money with the fed (at a higher rate currently) rather than lending to customers out there - that is why no inflation. When the adjusted monetary base chart starts to go down, meaning banks are lending out again, the money will then flow into the economy. This will then make inflation go up. By then, the Fed has to quickly 'catch up' by increasing rates drastically or face the unwanted scenario of high inflation. This 'catching up' may lead to the next recession.

https://fred.stlouisfed.org/series/BASE

To me, its seems that worldwide, policy makers, bankers, economists are more
fearful of inflation than nuclear war, Brexit, ISIS, etc.

So pumping money into the system is decidely a preferred route.
There is no stopping the stock markets, its infinite.
No one dares to stop it.. and why should it be stopped anyway?
No better returns elsewhere.