Singapore tightens monetary policy

- A + A (June 23): Opposition politicians in Singapore won’t support the government’s plan to proceed with a goods and services tax (GST) hike amid inflationary concerns. The Workers’ Party on Wednesday (June 22) said it “cannot support” the decision to raise the consumption-based tax and will “continue to argue” against any proposed increase. The statement, posted on the party’s Facebook page, came after Deputy Prime Minister Lawrence Wong said the timing of the tiered tax hike won’t be revised despite concerns over mounting price pressures. The tax is set to rise to 8% from 7% in January next year and then to 9% in 2024. Inflation in the trade-reliant business hub has surged, leading the Monetary Authority of Singapore to tighten monetary policy three times in the past eight months. The core inflation print for May, to be announced on Thursday, is expected to climb further from a decade-high of 3.3% in April, according to a Bloomberg survey. Earlier this … [Read more...] about Singapore opposition politicians won’t support GST hike plans

- A + A (June 23): Singapore’s key inflation gauge accelerated for a third month to the fastest in almost 14 years, bolstering the case for further monetary policy tightening and stronger action to buffer consumers from the drag of rising prices. The central bank’s closely watched core inflation print, which excludes private transport and accommodation, rose by 3.6% from a year ago in May, according to a joint statement on Thursday (June 23) from the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI). That pace, the fastest since December 2008, matches the median estimate in a Bloomberg survey, and compares with 3.3% in April. The increase was due to inflation across food, services, retail goods and energy, they said in the statement. They also repeated a warning from last month that prices will pick up in the coming months before easing toward year end as external pressures recede, while flagging upside risk from geopolitical … [Read more...] about Singapore’s faster inflation adds pressure to tighten policy

SINGAPORE (The Straits Times/Asia News Network): While the risk of a recession in the United States keeps mounting, chances are that Singapore and most Asian economies will avoid a deep and prolonged downturn. A growing number of economists and policymakers worldwide now see higher odds of a recession in the US, and possibly in Europe as well, in the next six to 12 months. But some are also pointing out mitigating factors that may soften the blow, including resilient consumer demand in developed markets backed by excessive savings. Asian economies, including Singapore, could get more help from a possible counter-cyclical economic recovery in China and the low interest rate policy in Japan that favours growth versus countering inflation. The latest warning on the US outlook came from Federal Reserve chief Jerome Powell, who finally admitted on Wednesday (June 22) that the steep interest rate hikes needed to rein in inflation could tip the US economy into recession. His … [Read more...] about US recession will drag Asia’s growth but region may avoid a sharp downturn: analysts

- A + A BENGALURU (June 24): The Philippine peso fell for the eighth straight session on Friday (June 24) as markets feared a modest rate hike by the country's central bank may not be enough to curb surging inflation, while other Asian currencies rose against a weaker US dollar. The Bangko Sentral ng Pilipinas (BSP) stuck to a 25-basis-point increase in its benchmark rate on Thursday for a second month in a row, fearing that more aggressive tightening could compromise growth. "Concerns over the gradual pace of BSP hikes, weaker budget balance, as well as policy uncertainty under the new president could be adding to PHP drags in the interim," Maybank analysts said in a note. The peso was on track for its worst week since June 2013. It was down 2% during the week, and hovered at a more than 16-and-a-half-year intraday low notched earlier in the week. The Thai baht was 0.1% weaker intraday, touching a more than five-year low, likely pressured by portfolio outflows, … [Read more...] about Philippine peso on track for worst week in nine years; Asian stocks gain

- A + A BENGALURU (June 23): The Indonesian rupiah held steady on Thursday (June 23) after the country's central bank left interest rates at a record low, while the Philippine peso hovered near its lowest level in 16 and a half years following a 25-basis-point rate hike. The rupiah was 0.2% higher, clinging to its earlier levels after Bank Indonesia (BI) acted as widely expected, balancing the need to support economic growth while maintaining stability in the currency. The BI's decision will put further pressure on the currency, said Fakhrul Fulvian, an economist at Trimegah Securities. "Stability in IDR (the rupiah) can only be achieved once BI clearly states its intention to start the tightening cycle seriously," he said. "Commodity windfall, rupiah's relative outperformance as well as a higher subsidy budget have provided room for BI to bide time and not join regional peers, for instance the Philippines, in tightening policy reins," said Radhika Rao, a senior … [Read more...] about Philippine peso hovers near 16-1/2-year low, Indonesian rupiah steady