The financial conditions index indicates that Singapore should see little growth benefit from increased global liquidity with a stronger SGD offsetting any beneficial impact on domestic financial conditions.

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Goldman Sachs's calculations suggest that, to reduce growth from 4% to 3%, (an optimistic estimate of America's new sustainable growth rate) the financial conditions index would need to increase by 1.25 percentage points.

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Despite two interest-rate increases this summer and a rise in corporate-bond yields, the index suggests that financial conditions in America are close to their loosest in ten years.

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The level of the index reflects the looseness of financial conditions: an increase in interest rates or the exchange rate leads to a tightening, a rise in share prices to a loosening.

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