Malaysian Monetary Policy Unchanged but Statement Warns on Inflation

March 11, 2011

Bank Negara Malaysia kept its Overnight Policy Rate at 2.75%, the level since a 25-basis point hike last July.  There were also 25-bp increases in March and May of 2010.  On-year CPI inflation in January of 2.4% was up from 2.2% in December, and a statement from central bank officials observes “some incipient signs that domestic demand factors could result in possible upward pressure on prices in the latter part of the year in line with the sustained expansion in economic activity.”   The statement goes on to conclude that “while the stance of monetary policy is expected to remain supportive of growth, the degree of monetary accommodation may be reviewed given the sustained growth in the economy and risks to inflation.”  During the recessionary period of 2008-9, the key interest rate was cut from a prior peak of 3.5% by 25 bps in November 2008, 75 bps in January 2009 and 50 bps to 2.0% in February 2009.

Copyright Larry Greenberg 2011.  All rights reserved.  No secondary distribution without express permission.



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