Using Negative Rates to Fight Inflation ! SINGAPORE STYLE
Posted On 13/04/2012
A picture says a thousand words.
Today’s policy decision brings us a stronger SGD, so rejoice on your holidays abroad.
Did QE bring all that inflation on shore ? Or was it the USD/SGD appreciation policy which is encouraging more inflows than we need ? Or is it a chicken and egg thing ?
An economist told me not to ask stupid questions when I asked why inflation is still so high over here when our currency is stronger than ever ? Even Switzerland has got their inflation under control.
Well, the economist says that a layman has no business in understanding the mechanics of an exchange rate policy even if I am a citizen of the country. That local prices can be controlled by just controlling the import and export price components. Domestically generated inflation will eventually be contained and so will asset inflation bubbles.
Apparently all central banks prefer their citizens, whom they work for, to be in the dark.
Case closed.
