Malaysia Gets First Central Bank Rate Hike since May 2011

July 10, 2014

Like the rate increases engineered in March, May and July 2010 plus that in May 2011, today’s tightening was an increment of 25 basis points and lifts the interest rate to 3.25%.  That’s only on a par with the latest 3.2% on-year inflation rate and leaves policy growth-supportive (that is accommodative) according to a released statement from Bank Negara Malaysia.   The action was taken for the following reasons:

Amid the firm growth prospects and with inflation remaining above its long-run average, the MPC decided to adjust the degree of monetary accommodation. This normalization of monetary conditions also aims to mitigate the risk of broader economic and financial imbalances that could undermine the growth prospects of the Malaysian economy.

The next policy review is scheduled for September 18.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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