Remember ministers jokes on inflation last yr? They told us that we should look on the bright side i.e. inflation excluding COEs as though biz vehicles don’t need COEs. http://atans1.wordpress.com/2012/08/13/inflation-why-the-misleading-picture-minister-media/
Wonder why they don’t crack such jokes this yr? Inflation (excluding COEs) not too looking gd for us and govt
From BT 15th October 2013
Coupled with a tight labour market, the central bank said that core inflation – which excludes costs of accommodation and private road transport – is expected to be 1.5-2 per cent in 2013, and rise to 2-3 per cent in 2014. With upside core inflation risks looming, economists from Nomura, Citi, DBS and UOB say that a tightening of monetary policy in April could be on the cards – particularly if prices rise beyond the government’s comfort zone.
Said Nomura analysts in a report: “Overall, the statement should raise market expectations of the MAS shifting towards an even tighter (foreign exchange) policy stance at the April 2014 meeting.”
Added Citi economist Kit Wei Zheng: “Though not our forecast, with the possibility that core inflation may breach the MAS’s implicit 2-2.5 per cent tolerance threshold in 2014, slope steepening in April 2014 cannot be ruled out, especially if growth uncertainties subside.”
Calling such a scenario “definitely possible”, UOB economist Francis Tan said: “It would have to be fuelled by something completely unanticipated, like if oil prices suddenly spike up due to renewed political tensions in the Middle East. Then the MAS will probably move in to tighten the Singapore dollar NEER.”
Ah well S$ will appreciate eve3n more against regional currencies. Gd for S’poreans travelling, not gd for tourists from the region, and for our companies.