Speaking in an adjournment motion to address inflation, WP MP Jamus Lim suggested that a temporary increase in CPF interest rate of around 2% for a six-month period to cope with cost of living. This, he said, would be consistent with the rise in inflation.
He also suggested that more be done to strengthen the Singapore dollar.
In his response, Minister of State Alvin Tan said that the tightening moves by the MAS has helped to dampen imported inflation from rising global food and energy prices.
MAS had made 2 tightening moves, one in October last year and then in April this year.
Global food commodity prices have surged by an average of 25.4% year-on-year over the first five months of 2022. In comparison, domestic food prices rose by 3.6% year-on-year over the same period.
While global energy prices increased by 27.5% between January and May, energy-related components in Singapore’s consumer price index went up by 13.6% year-on-year over the five months, Mr Tan said.
Mr Tan said also pointed out that “a strengthening exchange rate cannot fully offset global prices, without causing immediate negative consequences on growth, and therefore the labour market”.
For this reason, central banks are “guarded” in the speed and the extent to which they will raise interest rates, Mr Tan said. He also noted that monetary policy action in itself has “attendant spillover effects” that must be taken into account amid the uncertain and challenging economic environment.
“Therefore, a judicious blend of tight monetary policy and targeted, supportive fiscal policies (which are) carefully calibrated is most appropriate,” said Mr Tan.
In a follow-up Facebook post on his exchange with Jamus Lim in Parliament, Alvin said that a small and open economy like Singapore is not insulated from the impacts of an increasingly challenging global economic environment.
However, the government’s abilities to look and plan long term remained unchanged.
The government has laid strong foundations for the long term by providing a stable macroeconomic environment so that businesses and households can make economic decisions with confidence.
Extensive trade links help to diversify our sources of imports and exports.
The government will partner with Singaporeans and businesses to weather this difficult period through targeted support.
Mr Tan said:
What do netizens have to say to Jamus’ suggestion to temporarily raise CPF interest rates by 2%?
Most seem unimpressed.
Indeed, as Frank pointed out, not everyone needs a government handout. So why give to everyone? It’s more efficient to give to those who really need it. This is especially so when resources are limited.
Such a measure will benefit the rich – those who have more CPF savings.
Valid question by Low.
Why raise it for 6 months? How did Jamus determine this 6-month period? Is it arbitrarily determined, hoping that 6 months later, the world situation would have improved? What will happen after 6 months?
But really, it’s the needy including those who are unemployed who need help!
The young ones disagree as they are still unable to withdraw from their CPF to spend.