Why did the MAS decide to pause now? Does that signal that the worst is over when it comes to inflationary pressures?

I think it was probably a very close call.

Um, this is probably a pause, not a pivot per se.

We're not seeing MAS planning to ease monetary policy anytime soon.

I think the reason for this pause is really because of, uh, two things.

First is that, you know, um, they seem to be a little bit more comfortable about the inflation path, especially going out into 2027.

So we saw that they narrowed the 2026 core inflation forecast to 1.5 to 2% from 1.5 to 2.5% previously, and they explicitly mentioned that they see the core inflation actually stepping down a little bit more discernibly, uh, in the second half of next year.

So if the MAS is pausing the tightening, what is the trajectory of the Sing Dollar? Are we likely to see it soften? What does it mean for our imported food and energy costs?

Why did the MAS decide to pause now? Does that signal that the worst is over when it comes to inflationary pressures?

I think it was probably a very close call.

This is probably a pause, not a pivot per se.

We're not seeing MAS planning to ease monetary policy anytime soon.

I think the reason for this pause is really because of two things.

First is that they seem to be a little bit more comfortable about the inflation path, especially going out into 2027.

So we saw that they narrowed the 2026 core inflation forecast to 1.5% to 2% from 1.5% to 2.5% previously.

What does that signal to you, especially against the backdrop of the somewhat resilient headline numbers?

Do you see any merit in that kind of argument?

Yeah, I would trace back this shift to more populist, uh, you know, move to the left, for instance, as what we were, you know, talking about earlier.

Uh, that will have more room to run, okay? Um, so I'm not optimistic that, uh, come 2028 and then let's say if you have a new US president in place...

Because actually if you look at the US today, there is fairly bipartisan support to, for instance, be tough on China, you know, to basically try and, um, uh, look to protect the US market and, you know, basically protect the US, uh, labor force, for instance, right? So I think some of those structural forces will continue.

It may not continue in the current form or in the current, uh, you know, magnitude of pressure, but I think to a certain extent some of those structural forces will still have to continue to play out.

But I don't want to be pessimistic because I think that even as global supply chains are being, uh, you know, diversified and shifting, actually, we are not seeing de-globalization, right? We are just seeing, uh, you know, uh, more strategic, uh, globalization, meaning that there's a lot more focus on, uh, friendshoring, for instance, or nearshoring.

Because remember, you know, if, let's say, you have another pandemic and borders shut down, you want to be, uh, you want to have resources that are available to you nearby, right, rather than to be dependent on somewhere that is further away.

Yeah.

How much does this upward revision align with your expectations?

Generally, we were expecting them to upgrade the full year growth forecast since the first half was coming in much hotter than expected due to the global investment boom.

But of course, the range, you know, whether it was going to be 4 to 5% or 4.5 to 5.5% was debatable.

So it looks like, you know, um, they have bitten the bullet.

They are quite bullish on the, I think, second half outlook from here.

In fact, going from 2 to 4% to 4.5 to 5.5% suggests that, you know, we still probably see legs for the global AI investment boom to continue, uh, in the second quar-- uh, half of this year.

And also, they did make reference to the fact that the Middle East conflict actually had less severe implications, uh, than what was initially feared and because of the growth upgrade that we saw in many of our regional neighboring countries as well.

How sustainable is this global AI investment cycle for Singapore's growth in the coming months?

Is there a bit of a disconnect when you see what's happening on the ground when people are a bit cautious? What does it translate to when we talk about jobs and wage growth and spending?

Well, actually, the domestic labor market has been holding up quite well, I say, uh, you know, uh, notwithstanding all these external headwinds that we have experienced over the last year or so.

So I think in terms of the overall wage growth, we are still seeing firms basically intending to hire, although it's a little bit more cautious compared to the past.

And in terms of, uh, giving out wage growth is also probably a little bit more tepid, but that's also because we have seen inflation come off from the very high levels, you know, post, uh, pandemic as well.

So it's a little bit of a mixed bag.

Um, we still see demand for skilled labor in certain, uh, pockets, including, um, you know, the ICT type of, uh, jobs.

But you also see that churn that's happening, right? Because the, some of the tech companies are also, uh, you know, displacing some staff because of, um, the onset of AI and also other technologies.

Is this a sign that perhaps Singapore is getting too expensive?

What kind of inflation risks remain for Singapore, would you say, top of line?

Well, I think the main point really is that because Singapore imports, you know, almost everything that we consume, so when global oil prices or shipping or production costs rise, you know, that will have a impact on a wide range of goods and services that, you know, the average Singaporean, uh, household or businesses consume.

So that's the reason why I think, uh, MAS and MTI did really highlight that the risk to inflation is still tilted to the upside.

Although they did highlight, you know, that, uh, the risk could be two-sided.

I think it's true that, you know, the start of the US-Iran MOU doesn't mean that, you know, everything is settled.

Uh, we'll probably still see some starts and stops in terms of the reopening of the Straits of Hormuz and in terms of oil prices.

But financial markets tend to look ahead.

So talk to me about the impact that we're gonna see in the coming months, because we rely quite a bit on the e-commerce, um, sector, don't we, in Singapore?