When i ask investors who attend my seminars if SGD interest rate will increase in 2017, the majority took the view that Singapore will match US Fed increasing interest rates. For me, I have always told them that I will not be so sure if I were them.
My reasons are:
- US economy doing well, is Singapore economy doing well?
- If we follow US rates as we have been known to do so historically, won’t our currency be much stronger than our neighbouring countries? Won’t this make us noncompetitive? As far as I know, all asian countries, including China, are devalueing their currency.
- I am a very keen bond investor, and have observed corporate bond market rally. Interest rates cant be increasing too much when smart institutional money are buying bonds.
Well, I have been proven right. While the US interest rate has increased 3 times in the last 7 months, look at what happened to our SGD interest rates. Its at 2017 low.
Note that I am not an economist, but I do keep abreast of macroeconomics.