Chart of the Day: Singapore policy rates below Lehman crisis level

Should Singapore raise threshold for monetary easing?

According to HSBC Global Research, Singapore and Hong Kong are amongst countries in Asia whose policy rates or benchmark rates  are now well below their average level in the third quarter of 2008. While interest rates cuts are expected across the region as markets fear the worst, HSBC points a negative effect of overly loose monetary conditions.

"This, in itself, should raise the threshold for monetary easing. In fact, central bankers in Asia have grappled for the past few years with the effects of overly loose monetary conditions. Easing policy further, even if it provides a little relief in the short term, could provide even bigger headaches later on," Frederic Neumann, economist at HSBC said.