Hint of Possible Future Easing from Bank Negara Malaysia

September 5, 2013

A trend reversal seems possible.  28 months have passed since the last change of Malaysia’s Overnight Policy Rate (OPR), and that move was a tightening in May 2011 and the four such move in a space of 12 months.  The OPR was kept at 3.0% after today’s meeting, but a statement released by monetary officials dropped calling the existing policy appropriate as in prior statements and instead concluded with a stress on risks:

There are increased uncertainties to the balance of risks surrounding the outlook for domestic growth and inflation. The MPC will continue to carefully assess the global and domestic economic and financial developments and their implications on the overall outlook for inflation and growth of the Malaysian economy. 

Inflation is low although expected to trend somewhat higher over the next year.  Growth has moderated and will have to be increasingly reliant on domestic demand because of increased “risks in the global economy and international financial markets.”

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without expressed permission.

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