And who say Singapore's runaway inflation is due entirely to global demand/supply inequilibrium, and has nothing to do with our govt's monetary policy? Even though GST has not increase, by weakening the Sing$, we are actually paying more taxes (inflation tax)than before. Besides increasing the govt's coffer, rising inflation will also help to boost the GDP figure when inflation figures are under-reported. Now you know why Spore's inflationary spiral will never end. 
http://in.reuters.com/article/asiaCompanyAndMarkets/idINSP24212320081223?sp=true
Singapore to keep money rates low as economy sags
Tue Dec 23, 2008 4:16pm
By Kevin Yao
SINGAPORE, Dec 23 (Reuters) - Singapore's central bank is likely to flood the local money market with liquidity in the coming months as it prepares to let its currency weaken to head off a sharper economic slowdown, analysts said on Tuesday.
The Monetary Authority of Singapore, the central bank, has in recent months injected cash into the local money market to stem the rise in short-term rates to help ease credit strains, which could otherwise hit local firms and individuals, they said.
"Local money market has been flooded with Singapore dollar funds," said a trader in Singapore.
"Everyone wants to keep Singapore dollar cash in the money market to protect their balance sheets," added the trader.
One-month interbank market rates (SIBOR) <SISGDD=ABSG> fell to about 0.7 percent this week from 2.275 percent in September, when the failure of Lehman Brothers pushed up funding costs.
Three-month money rates have fallen below 1 percent from 2.225 percent in September, while one-year rates have fallen to 1.27 percent from 1.875 percent in September.
"The growth prospects are quite poor," said Selena Ling, head of treasury research and strategy at OCBC Bank in Singapore.
"They have injected funds to try to bring interbank rates slightly normal, if not down to more accommodative levels," she added.
Unlike most of its peers, Singapore's monetary authority calibrates its policy by guiding the exchange rate, rather than by setting short-term interest rates.
The latest Reuters poll forecast the city state's economy would contract by 1.1 percent in 2009, before a recovery in 2010.
Analysts at Barclays Capital said in a report that they expected the monetary authority, which manages the Singapore dollar within a secret trade-weighted band, to shift the band slightly downwards when it reviews policy in April.
The Singapore dollar <SGD=> fell slightly to 1.4538 per U.S. dollar on Tuesday, off its 2-1/2-month high of 1.4250 hit last week.
Analysts also expect Singapore's government to unveil an expansionary fiscal policy in January, including tax relief for firms and households, to help arrest the economic slowdown.
"I think they will probably be focusing on the fiscal stimulus in the near term," Ling added.
Central banks around the world, led by the U.S. Federal Reserve, have slashed interest rates recent weeks as major economies slip into recession amid the global financial crisis. (Editing by Tomasz Janowski
http://in.reuters.com/article/asiaCompanyAndMarkets/idINSP24212320081223?sp=true
Singapore to keep money rates low as economy sags
Tue Dec 23, 2008 4:16pm
By Kevin Yao
SINGAPORE, Dec 23 (Reuters) - Singapore's central bank is likely to flood the local money market with liquidity in the coming months as it prepares to let its currency weaken to head off a sharper economic slowdown, analysts said on Tuesday.
The Monetary Authority of Singapore, the central bank, has in recent months injected cash into the local money market to stem the rise in short-term rates to help ease credit strains, which could otherwise hit local firms and individuals, they said.
"Local money market has been flooded with Singapore dollar funds," said a trader in Singapore.
"Everyone wants to keep Singapore dollar cash in the money market to protect their balance sheets," added the trader.
One-month interbank market rates (SIBOR) <SISGDD=ABSG> fell to about 0.7 percent this week from 2.275 percent in September, when the failure of Lehman Brothers pushed up funding costs.
Three-month money rates have fallen below 1 percent from 2.225 percent in September, while one-year rates have fallen to 1.27 percent from 1.875 percent in September.
"The growth prospects are quite poor," said Selena Ling, head of treasury research and strategy at OCBC Bank in Singapore.
"They have injected funds to try to bring interbank rates slightly normal, if not down to more accommodative levels," she added.
Unlike most of its peers, Singapore's monetary authority calibrates its policy by guiding the exchange rate, rather than by setting short-term interest rates.
The latest Reuters poll forecast the city state's economy would contract by 1.1 percent in 2009, before a recovery in 2010.
Analysts at Barclays Capital said in a report that they expected the monetary authority, which manages the Singapore dollar within a secret trade-weighted band, to shift the band slightly downwards when it reviews policy in April.
The Singapore dollar <SGD=> fell slightly to 1.4538 per U.S. dollar on Tuesday, off its 2-1/2-month high of 1.4250 hit last week.
Analysts also expect Singapore's government to unveil an expansionary fiscal policy in January, including tax relief for firms and households, to help arrest the economic slowdown.
"I think they will probably be focusing on the fiscal stimulus in the near term," Ling added.
Central banks around the world, led by the U.S. Federal Reserve, have slashed interest rates recent weeks as major economies slip into recession amid the global financial crisis. (Editing by Tomasz Janowski
