S'pore interest rate hike unlikely before Sept
Singapores financial market, including its mortgage sector, now has more time to prepare for the anticipated climb in benchmark rates after the US central bank signalled that the increase is not likely to happen until September at earliest.
Although this will remove some of the uncertainty felt by Singapore exporters during the near term, experts believe that Singapores benchmark interest rates may experience some erratic movements before stabilising towards the end of the year.
Following the US Federal Reserves announcement on Thursday (18 June), the three-month Singapore Interbank Offered Rate (SIBOR) remained unchanged at 0.82 percent, while the exchange rate of the local currency against the greenback slightly strengthened at S$1.33 per US dollar.
Moreover, the US central banks announcement seems to hint that there could be two rate hikes in 2015, with the first likely to happen by September, but said it would adopt a less aggressive stance in raising the interest rate.
Once the US Federal Reserve makes the concrete announcement on the interest rate hike, Singapores interest rates are expected to follow suit, noted UOB economist Francis Tan as reported by Channel NewsAsia.
Initially we are expecting an overshooting of interest rates being higher at a much quicker pace and then it should come back down again and moving toward 1.25 percent at the end of this year.
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories emailnikki@propertyguru.com.sg
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