Malaysian Monetary Policy Tightened

March 4, 2010

Bank Negara Malyasia today raised its overnight policy rate for the first time since April 6, 2006.  From a 2.5-year peak of 3.5%, such had been cut by 20 basis points in November 2008, 75 bps in January 2009 and  50 bps to 2.0% in February 2009 where such stood until today.

Today’s hike of 25 basis points was accompanied by a statement declaring Malaysia’s recover “firmly established” and inflation rising gradually but likely to remain moderate.  On-year GDP growth and unemployment last quarter were 4.5% and 3.5%.  Industrial production ended 2009 some 8.9% higher than a year earlier, but consumer price inflation of 1.3% in January was a third of its advance in the prior year to January 2009. The statement characterizes policy as still “accommodative” and today’s action as part of a “normalizing” process, suggesting this will be the first of a series of increases.

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



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