What A Safe Monetary Policy Statement !

” MAS will maintain its policy of a modest and gradual appreciation of the S$NEER policy band.  There will be no change to the slope and width of the policy band, as well as the level at which it is centred.  This policy stance is assessed to be appropriate for containing inflationary pressures, anchoring inflation expectations, and facilitating the restructuring of the economy towards sustainable growth.”

GDP -1.4% QoQ versus +1.7% expected. GDP -0.6% YoY versus 0% expected.

” More than half of overall inflation in 2013 will be accounted for by imputed rentals on owner-occupied accommodation and car prices.”

What does this say to me ? Note I am no economist here so everything is as layman dumb as I am.

1. They are saying that as long as you put your money in SGD versus the NEER basket, it will give you a return of 1.5-2.5% (last estimated slope of appreciation).

Japan, what are you waiting for ?

SGD will appreciate ! Note the catch is, if you are not based in SGD and why would anyone want to take their money out when its safe and will continue to gain.

This is for foreign investor protection and a guarantee.

2. When >50% of inflation is coming from imputed rentals, (note the disclaimer that the culprit is owner occupied accomodation) and car prices, the monetary policy is largely helpless.

So a dead end there.

But look more carefully. If imputed rentals are still going up, would that not affect the rentals of the commercial sector as well ?

Just a thought that it would not do well for businesses and allow the larger than life Reits we have here to takeover even more property and monopolise rental prices.

3. Exports will continue to suffer, especially those exporting in USD terms.

This will continue to force businesses to shape up or ship out, a part of the greater economic restucturing plans.

Manufacturers are already suffering from rent and labour constraints. Lower prices for their products will drive a stake into their hearts.

This leaves room to expand the services sector, particularly, financial services where more foreign money can be expected (for the above mentioned reason of appreciating returns). It makes extreme good sense with Luxembourg and the rest (including Cyprus) closing down.

4. Hold on to your horses if you think Singaporeans do not benefit.

They will !

The SOR is likely to remain low or perhaps crash to negative territory. Reason being that the inflows into Singapore will remain strong and liquidity will be overeasy without MAS having to fund the system.

SGD fwds will be soft into the next Monetary Policy announcement in Oct.

Singaporeans with floating rate property loans can sleep easy knowing that their loan rates will remain insignificant. Or any other floating loan for that matter.

Buying offshore properties will now run the risk of currency loss, so think twice or maybe think longer term.

Holidays will be cheap, especially holidays to radiation Japan. Just do not buy Japanese property or your currency losses will double.


Like I said in my earlier piece on my thoughts on today’s MPS, this one is not the one that matters. It is the next one.

When they have a better chance to assess the impact of their economic restructuring plans, they will have a better idea of what to do for the future.

Until then, like I said before, it would be good to let us know where they stand. Except I am starting to believe, THEY DON’T REALLY KNOW.

But this is just my layman opinion so please do not sue me.