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Thread: US Federal Reserve raises interest rates to 1% in bid to hold off inflation

  1. #6
    Join Date
    May 2012
    Posts
    3,040

    Default

    Interestingly, just witnessed USD decline in value to SGD overnight.

    http://www.straitstimes.com/business...onetary-policy

    One possible outcome is for US rate rise to coincide to an extent with the appreciation in SGD value without influencing interest rates significantly, although this could cause our products and services to become costlier and affect competitiveness as a country.

    But it could also induce speculation in SG properties from global investors with the appreciation in SGD (to an extent)...
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

  2. #7

    Default The new norm or moving towards the normal?

    I think bringing interest rates to 3-5% levels is a sign that the global economy is sustainable and healthy. Cheap money lasting 10 years is not a good sign and hopefully we do not reach that kind of length. I am more concerned about consumer psychology of what is norm will start to get warped especially for the young millennials who think 1-2% interest rates is 'normal and sustainable'. This forms a dangerous bubble of taking cheap and dangerous loans without anticipating future, aggressive hikes. You will question, what is the new normal? When reality hits them, getting used to 5% rates will be really tough for them. This will adversely affect the demand of property in the long run as they will be the likely new owners whom we will sell to in the future. Bearing in mind, CMs will not be here to stay as interest rates go north. This is now the intricate balance against external economic factors.

    MAS interest rate adjustment is anticipatory which is reflective of our current rates of 1.25% to 2+% some of us are paying. This is necessary so that we are cushioned against any psychological shocks from external market forces.

    2 cents,
    PropVestor

  3. #8
    Join Date
    May 2012
    Posts
    3,040

    Default

    If economic growth is at 2 plus%, CPF OA is at 2 plus%, SSB is at max 2 plus%, bank deposits pay not more than 1 plus%, how can interest rate of banks go beyond 3%?

    Quote Originally Posted by PropVestor View Post
    I think bringing interest rates to 3-5% levels is a sign that the global economy is sustainable and healthy. Cheap money lasting 10 years is not a good sign and hopefully we do not reach that kind of length. I am more concerned about consumer psychology of what is norm will start to get warped especially for the young millennials who think 1-2% interest rates is 'normal and sustainable'. This forms a dangerous bubble of taking cheap and dangerous loans without anticipating future, aggressive hikes. You will question, what is the new normal? When reality hits them, getting used to 5% rates will be really tough for them. This will adversely affect the demand of property in the long run as they will be the likely new owners whom we will sell to in the future. Bearing in mind, CMs will not be here to stay as interest rates go north. This is now the intricate balance against external economic factors.

    MAS interest rate adjustment is anticipatory which is reflective of our current rates of 1.25% to 2+% some of us are paying. This is necessary so that we are cushioned against any psychological shocks from external market forces.

    2 cents,
    PropVestor
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

  4. #9

    Default

    Quote Originally Posted by PropVestor View Post
    I think bringing interest rates to 3-5% levels is a sign that the global economy is sustainable and healthy. Cheap money lasting 10 years is not a good sign and hopefully we do not reach that kind of length. I am more concerned about consumer psychology of what is norm will start to get warped especially for the young millennials who think 1-2% interest rates is 'normal and sustainable'. This forms a dangerous bubble of taking cheap and dangerous loans without anticipating future, aggressive hikes. You will question, what is the new normal? When reality hits them, getting used to 5% rates will be really tough for them. This will adversely affect the demand of property in the long run as they will be the likely new owners whom we will sell to in the future. Bearing in mind, CMs will not be here to stay as interest rates go north. This is now the intricate balance against external economic factors.

    MAS interest rate adjustment is anticipatory which is reflective of our current rates of 1.25% to 2+% some of us are paying. This is necessary so that we are cushioned against any psychological shocks from external market forces.

    2 cents,
    PropVestor
    Agree, when interest rate become 3 to 5 % property price should be cheaper due to cheaper money to loan by the developer to build property, cheaper to employ and cheaper to buy material to build. Property in the long run will become cheaper. Those with property now will be worst off when interest rate increase to 3 to 5 %.

    Money in the Bank should earn better interest, CASH is King.

  5. #10

    Default

    Quote Originally Posted by Kelonguni View Post
    If economic growth is at 2 plus%, CPF OA is at 2 plus%, SSB is at max 2 plus%, bank deposits pay not more than 1 plus%, how can interest rate of banks go beyond 3%?
    Take a look at the historical charting of interest rate from 1988 to 2017 (till date). It is now artificially depressed due to the Great Depression of 2008. MAS kept it low to encourage lending and business activity in such gloomy times. I personally think this is not sustainable for a healthy business environment as cheap money will run out eventually which we are seeing the initial steps of it.

    http://www.tradingeconomics.com/singapore/interest-rate

    I quote:

    "The benchmark interest rate in Singapore was last recorded at 0.22 percent. Interest Rate in Singapore averaged 1.66 percent from 1988 until 2017, reaching an all time high of 20 percent in January of 1990 and a record low of -0.75 percent in October of 1993."

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