Particularly in small open economies, where shocks to the exchange rate and other shocks from abroad have a significant impact on inflation, it is quite likely that the generation of inflationary potential may initially translate into asset price growth or, in some cases, current account deficits rather than into overt CPI inflation. The latter may then stay quite low for a long time even when the economy is overheating. As a result, rather than inflation-forecast targeting, central banks may slide towards a response-torecent-inflation-numbers regime. What is the solution to this situation? I offer no simple one. The above dilemmas need to be reflected in our thought processes. In monetary policy decision-making, in addition to model-based forecasts of highly variable CPI inflation, we need to give equal weight to the longer-term fundamental inflationary pressures generated by macroeconomic, monetary and financial developments. I understand the arguments that we have no reliable indicator of these pressures and that few people outside the central bank itself would pay heed to an index of fundamental inflationary pressures. But you can't escape reality. It doesn't pay to put everything on one card. It's better to have a broader set of models and, on top of that, a set of indicators to allow for cross-checking. From fears of low inflation to the current inflation shock For a quarter of a century, central banks in developed countries, along with legions of renowned macroeconomists, focused almost exclusively on how to prevent inflation from getting too low. At certain times, this undoubtedly made sense.
Tharman Shanmugaratnam: Singapore’s dynamically changing landscape Speech by Mr Tharman Shanmugaratnam, Chairman of the Monetary Authority of Singapore, at the opening of One Raffles Place Tower Two, Singapore, 18 September 2012. *  *  *  Wee Ee Cheong, Chairman, OUB Centre Limited, Mr Henry Kok, General Manager, OUB Centre Limited, Distinguished guests, Good evening. It is my pleasure to be invited to officiate the opening of a new twin skyscraper in Raffles Place – One Raffles Place Tower Two. It is part of the continuing rejuvenation of the cityscape at Raffles Place, which continues to be at the heart of businesses and commerce in Singapore. Raffles Place – a continuing history of new blended in old Raffles Place has indeed been a continuous story of the new inserted in the old, as it emerged from being a humble docking location for small boats and ships in the early 1800s, to become a thriving centre of regional commerce and now a global business and financial centre. On 8th August 1988, OUB Centre, now called One Raffles Place Tower One, was opened by Mr Lee Kuan Yew, who was then Prime Minister. He had noted the building’s quality design and distinctive workmanship. It was also an icon for Singapore at the time, as the building went on to be recognised as the tallest building in the world outside of the United States. Designed by Kenzo Tange, One Raffles Tower One still remains amongst the tallest three skyscrapers in Singapore.