Malaysian Monetary Tightening Paused

September 2, 2010

Following hikes of 25 basis points each this past March, May and July, Bank Negara Malaysia left its key policy rate at 2.75% today and released a message that called the rate level appropriate and accommodative and did not speak about the need for rate normalization.  While domestic demand has been strong, export growth is likely to slow.  Real GDP advanced 8.9% between 2Q09 and 2Q10, but CPI inflation, although up recently, was still just 1.9% in July.  Half of the rate cuts implemented during the world recession has been reversed this year.

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express permission.

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