Malaysia’s First Central Bank Rate Hike Since 2018 Surprised Analysts

May 11, 2022

There’s been a 25-basis point increase in Bank Negara Malaysia’s policy interest rate that was not foreseen by analysts. This hike to 2.0% from 1.75% marks the first increase since January 2018. Malaysian CPI inflation in April of 2.2% had been a tad low than forecast and matched the lowest level since August 2021. A released statement from the central bank’s Monetary Policy Committee observes that “the unprecedented conditions that necessitated [a record low interest rate during the pandemic] have since abated. With the domestic growth on a firmer footing, the MPC decided to begin reducing the degree of monetary accommodation. This will be done in a measured and gradual manner, ensuring that monetary policy remains accommodative to support a sustainable economic growth in an environment of price stability.” Between May 2019 and July 2020, the policy interest rate had been cut five times by a total of 150 basis points.

Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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