Singapore: Across Asia, central banks are adjusting policy to get a grip on surging capital inflows, a surfeit of cash and rising Singapore property and asset prices. One exception to the trend is Singapore.

The Monetary Authority of Singapore (MAS), the country's de facto central bank, is expected to stick to its three-year-old, modestly tight monetary policy, even though analysts say that warning lights are flashing.

The economy is booming, high-end housing prices have skyrocketed, wages are rising and the stock market has jumped more than 20 per cent in six months - even after the beating that global equity markets have taken this month.

"All the risky asset prices are rising," said Prakash Sakpal, an economist at ING. Sakpal expects a tight labour market to feed into inflationary pressures this year.

Tame inflation

Oil prices have driven up costs elsewhere in Asia but inflation in Singapore is tame, due mainly to falling car prices. Annual inflation in January was just 0.3 per cent, but it could spike higher when the goods and services tax goes up on July 1.

Analysts say the central bank may have its work cut out in coming months if it opts to stick to its current policy, as expected. It announces policy changes every six months, with the next review due in April.

Monetary policy is, unusually, run via the currency, with the central bank guiding the Singapore dollar within a trade-weighted band whose parameters are never made public.

But analysts reckon that for the last two years the currency has threatened to overshoot the top end of this secret policy band. Foreign currency reserves at the MAS have been climbing, showing it has worked hard to keep the currency within the range.