Analysts worried about higher inflation, predict stronger S$

In Currencies, Economy on 16/10/2013 at 4:21 am

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.

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.

  1. Higher inflation? But people are still buying expensive things here like no tomorrow leh!

  2. All bets might be off.
    Just received this message(7 minutes ago) from my friend – OK Everybody….This is important. I got an email today and I cried for a bit as I came to terms with the Truth. I need you on board with me here. This dissolution is going to span over some weeks and we have to be prepared for that. October 17th marks Foreign Debt – November 1st marks US stuff like (large payments to Medicare providers, social security beneficiaries, and veterans, as well as salaries for active duty members of the military) Ashtar said it is expected we will have Global Economic Collapse, maybe this week THAT DOES NOT MEAN the OTHER THINGS will happen. Please STAY WITH ME I am COUNTING ON YOU to help everyone we know understand. We will need to HOLD THE LIGHT SOME WEEKS. You know, maybe another month because we are dissolving something Worldwide and it will take our patience and LOVE. We cannot throw in the towel now. You know, we have always gotten thru this before. We will now. We Will Do It Together and We Will Do It With LOVE. Stay here with me – FOCUS – 11/11/13 IS THE NEXT BIG DATE ok? Please share this – copy the above and drop it into your share – it will help MANY who are at their ropes end.
    Wall Street doubts debt deadline and puts its money on 1 November

  3. Yes. Inflation can rise for all I care. Mind you, its also from a very, very low base.. so what is a rise of 2% of 2%?? There is so much cash… easy cash.. still floating around. Never mind the loan to valuation rules.. the effects of that will not be felt for another 12 months.
    And it affects developers, property agents. The banks can take care of themselves.

    And the debt ceiling stuff: to me its a non event. Its their domestic politics. In the international finance world, they being USA, can always negotiate for deferred payments.
    And can the world twist USA’s arm and say “no”?? Its a old school tie network. IMF,World Bank, UK, Germany, Japan.. and even China are all in the game. They talk to each other.

    They all know that confidence is key in the market place. That is what has been keeping the entire world economy up & running since 2008. Its a synchronised play. No body wants collapse and no one wants world war 3 either.

    Collapse?.. recent survey by Manulife ( 500 online respondents ) shows that Singaporeans keep 35 months of cash as “standby” to prepare for crisis, and.. to invest when the opportunity arises .

    There… lots of cash waiting.

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