Macroeconomics Essay

850 Words Mar 8th, 2014 4 Pages
End of
Period | Interbank
3-Month | 2011 | Jan | 0.44 | | Feb | 0.44 | | Mar | 0.44 | | Apr | 0.44 | | May | 0.44 | | Jun | 0.44 | | Jul | 0.44 | | Aug | 0.31 | | Sep | 0.25 | | Oct | 0.44 | | Nov | 0.50 | | Dec | 0.38 | 2012 | Jan | 0.38 | | Feb | 0.38 | | Mar | 0.38 | | Apr | 0.38 | | May | 0.38 | | Jun | 0.38 | | Jul | 0.38 | | Aug | 0.38 | | Sep | 0.38 | | Oct | 0.38 | | Nov | 0.38 | | Dec | 0.38 | 2013 | Jan | 0.38 | | Feb | 0.38 | | Mar | 0.38 | | Apr | 0.38 | | May | 0.38 | | Jun | 0.38 | | Jul | 0.45 | | Aug | 0.39 | | Sep | 0.42 | | Oct | 0.40 | | Nov | 0.40 | | Dec | 0.40 | |

* Interest
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• We continue to hold on to our view that inflation in early 2012 will continue to be driven mainly by domestic factors via lagged effects of wage pressures and private transport (COE) costs. Eventually, a more subdued growth in 2012 may dampen the trend of rising inflation going into 2012 because slowing economic growth may trickle down into slower wage growth and thus restrain purchasing power for the high end durables expenditures such as, but not limited to, private transport. CPI inflation is expected to decline to around 3.8% in 2012 from the 5.0% in 2011.
• Overall, on monetary policy, on growth-inflation prospects, our call at this juncture is for MAS to stand pat in their biannual MPC meeting in Apr 2012 (continue with the policy of a modest and gradual appreciation of the S$NEER policy band), subject to evolving growth-inflation dynamics in early 2012. At this juncture, concerns about continued inflationary pressures from a tight labour market, transport and good/services cost (headline inflation at above long term 2.0-2.5% rate) with some potential upside risk to growth, justifies the continued existing S$NEER central path trajectory. Also, taking into consideration, recent global risk sentiment and foreign exchange fluctuations, we have

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