and international trade encouraged investment and supported productivity. technological advancements also lifted global productivity, shrank distances and lowered costs. the entry into the global trade system of vast new labour markets in china and eastern europe pushed down the prices of many traded goods. global supply chains grew rapidly, minimizing costs by linking the global economy through heightened specialization and trade. these supply developments all fostered a period of solid growth, low inflation and low interest rates. but these forces are now shifting. the failure to adequately share the benefits of growth has fuelled populism that is causing countries to turn inward. support for globalization is stalling or even reversing, and productivity growth is trending down. and as the growth in the working - age population slows and businesses find it harder to hire workers, there could be persistent upward pressure on wages. if higher wage costs are not matched by improvements in productivity, the costs of production will increase. almost three years of the pandemic and the invasion of ukraine by russia have also highlighted some of the vulnerabilities of interconnected trade. the pandemic made clear that relying too much on highly specialized supply chains can have downsides. and russia's weaponization of its natural gas supply has underscored the risks of assuming all countries share the same interests in peace and prosperity. rising geopolitical tensions, more broadly, have underscored the fragility of some business relationships. in the future, it seems likely that supply chains will be shorter, more diversified and more resilient. trade will likely narrow to more trusted partners. these changes will increase resilience but at the cost of efficiency. and through this adjustment, production costs could rise, increasing price pressures. over the long term, it seems likely that we won't have the same disinflationary forces that we've had for the past 30 years. these potential developments could make it harder to bring inflation back to the 2 % target and keep it there. but how much harder is very difficult to say. these are fundamental uncertainties we'll need to confront in the years ahead. but by constantly focusing on achieving the 2 % inflation target, our monetary policy framework is well designed to address uncertainty and adapt to new developments. if the inflationary forces going forward are stronger than we expect, we will start to see inflation coming in above our forecasts. and we will adjust our policy settings to achieve the 2 % target. if,

that we cannot reliably determine whether asset prices have overshot fundamentals or whether leverage has reached unsustainable levels. but the issue is not whether we can establish if there is an asset bubble or not. the issue is whether the rise in asset prices is creating negative spillover effects on the economy or whether a future sharp reduction in asset prices will lead to instability or serious dislocations. if the assessment is that it would, we have to act proactively to moderate prices now. and bis central bankers ’ speeches this has indeed been the approach taken by mas and the government with respect to property prices. how macroprudential policies have been applied singapore applied macroprudential tools as early as 1996, to help cool an overheated property market. but it is only since 2009 that macroprudential policies have been applied in a more concerted and calibrated fashion – again to help moderate price increases in the residential property market. following the global financial crisis, the confluence of low interest rates, firm domestic demand underpinned by sustained income growth, and supply shortages in the residential property markets caused home prices to rise rapidly. this had implications for both price stability and financial stability. as rentals increased on the back of rising property prices, imputed rentals on owneroccupied accommodation accounted for about a third of overall inflation during 2011 – 2012. cpi - all items inflation averaged 4. 9 % per annum during this period. mas was concerned that this would unhinge general inflation expectations and spill - over into more rapid wage growth across the economy. at the same time, the stock of mortgages surged by about 70 % from end - 2009 to end - 2012, posing risks for financial stability. to be sure, there was little imminent danger. households ’ net asset positions were still strong, with the aggregate household debt - to - asset ratio stable at around 16 %. the non - performing loan ratios for mortgages remained low at 0. 25 %, and the amount of housing loans in negative equity was negligible. but if domestic income growth faltered or if the global interest rate cycle turned abruptly, mortgage financing burdens could escalate. households ’ balance sheets could deteriorate if home prices fell, as much of the increase in household wealth had been driven by a rise in the value of property assets. the government was thus concerned that households were over - extending themselves in the low - interest rate environment. if a sufficiently large