Malaysian Monetary Policy Remains Paused

November 12, 2010

Bank Negara Malaysia had implemented three consecutive 25-basis point rate hikes at its March, May, and July meetings but, as in September, left its Overnight Policy Rate at 2.75%, still 75 basis points shy of the pre-recession 3.5% level.  A statement released today expressed concern about “the potential risks arising from large and volatile capital flows,” predicted “moderate inflation going into 2011” and reiterated that interest rate levels are both “appropriate and “accommodative.”  Growth slowed in the third quarter from the high pace of 2Q as monetary officials had anticipated, and they expect activity to remain well supported by domestic demand going forward.

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

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