Interest rate is rising.
PM Lee recently warned of a possible recession in the quarters ahead.
Put rising interest rate and a slowing economy together, we get a rather gloomy picture.
The evil which is inflation is preferred to the evil which is deflation.
Although inflation is the lesser evil, it isn't as benign when it is heightened which is what we are seeing now in the world.
We can reduce inflationary pressure either by increasing supply of goods and services which are in demand or tempering demand for such goods and services.
As it is difficult to increase supply right away, central banks are trying to tame inflation by increasing interest rate in an effort to reduce demand.
Increasing interest rate increases the cost of debt.
Credit is the lifeblood of commerce and most businesses are leveraged to some degree.
If the economy is healthy, businesses can pass on the higher cost of doing...