Bank Negara Malaysia

July 7, 2011

Officials at The Central Bank of Malaysia were not influenced by China’s interest rate hike yesterday.  After their latest bi-monthly policy meeting, they instead surprised many analysts with a decision not to increase Malaysia’s overnight policy rate beyond its current level of 3.0%.  The authorities took this cautious approach in spite of a doubling of CPI inflation over the past year to 3.3% and a continuing acknowledgement of upwardly skewed future price risks.  Officials had previously implemented rate hikes of 25 basis points in March, May and July of 2010 and this year on May 5.  Today’s statement speaks of a more uncertain global financial market prognosis and moderating Malaysian growth following a GDP rise of 4.6% between 1Q10 and 1Q11.  The statement nonetheless implies that further interest rate normalization will be consummated in the future.

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



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