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Monetary Policy (Inflation (Core Inflation (excludes costs of…

- - - - Home ownership rate stands at 90.9% in 2016, costs of accommodation unlikely to affect Singaporeans
      - private road transport in the form of COE prices, only incurred once every 10 years typically, long interval
      - changes in costs of these 2 items do not translate into changes in cash expenditures for most SG households
      - volatile and significantly influenced by administrative policies
    - - Good measure of trend inflation and a relatively robust predictor of future headline inflation
        
        Important indicator to reflect changes in underlying demand conditions, provide useful information for monetary policymaking
- - - - as it affects economy with lags, has to be pre-emptive and forward looking
        
        BBC. Basket(mitigates volatility of foreign exchange markets), Band(absorbs short term volatility and provides flexibility in managing exchange rate), Crawl (prevent misalignment in currency by allowing it to fluctuate within the band
  - - - Domestic prices, fully reflect by 4th quarter of shock (1 year)
        
        consumer prices
        
        a 1% appreciation in ER leads to a 0.1% decline in CPI in short term and a 0.4% decline in the long run