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If inflation drops below target because the Internet pushes prices down, the central bank will reduce interest rates, allowing faster growth while leaving inflation unchanged.
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Likewise every 10% fall pushes prices down by 1-2%.
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With other bond funds, investors risk getting back a lot less than their original cost if interest rates rise, because that pushes bonds' market prices down.
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But as Stephen King, the chief economist at HSBC, points out, that link seems to have gone, perhaps because of excess capacity at home, or because China's increasing presence in world trade pushes the prices of manufactured goods and labour down.
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Cheap labor from places such as India and the Philippines is seen as pulling down wages for Singaporeans, even as property buying by wealthy foreigners pushes up home prices.
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