Singapore’s central bank has said its macroprudential measures have achieved “some degree of success” to cool the property and car markets and it will recalibrate them as market conditions change.

Ravi Menon, managing director of the Monetary Authority of Singapore (MAS), was reported saying that its macroprudential measures will support monetary policy and financial supervisory policies to secure sustainable asset prices and financial stability.

He said the central bank faces several key challenges ahead when implementing policies.

Externally, these include a “wall of money” and low interest rates that could potentially set off asset market bubbles. These could in turn affect consumer price stability and financial stability.

Domestically, Singapore is also facing a “demographic cliff that will tighten labour markets” and potentially set off a wage-price spiral that could unhinge inflation expectations.

Recently, Mr Menon said the MAS had to step in to moderate price increases in the property and car markets.

It was concerned that a sharp rise in asset prices could have implications for both price stability and financial stability. Spikes in Certificate of Entitlement (COE) prices could also affect consumer price stability.

As a result of MAS’ measures, “property prices finally appear to be stabilising,” Mr Menon said, with price increases dipping below 2 per cent last quarter compared to the previous quarter. COE premiums for cars have dropped 25 per cent since MAS’ restrictions on car financing in February.

Meanwhile, Mr Menon said MAS’ exchange rate-centred monetary policy remains relevant and the central bank will continue to use the exchange rate as its monetary policy tool to keep inflation in check.

He said: “Singapore’s fundamentals remain sound. Fiscal prudence, financial discipline, minimising debt and living within our means will provide us policy space and buffer to weather whatever comes ahead. This is an advantage most countries do not have.”


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