Kuala Lumpur: Standard Chartered Malaysia expects Bank Negara Malaysia (BNM) to hike its policy rate to 3.00% from 2.75%, reversing Covid-induced rate cuts.
The research house said strong growth, rising broad-based inflation will prompt a further tightening of monetary policy.
“We will keep an eye on the assessment of the BNM’s monetary policy stance, which may reveal how close the central bank is to the end of its tightening cycle,” it said in a note today.
Malaysia’s growth remains strong, with gross domestic product expected to grow at 8.8% for the full year 2022, according to a research firm.
“Inflation is rising and broad-based, reflecting firm demand amid rising wages in manufacturing and services, but service wages remain in medium-term trend. It is below the growth rate,” he added.
However, Standard Chartered said upside inflation risks remained, including broader inflationary pressures, higher service costs and still-high import prices.
“Assuming the government announces some form of subsidy adjustment in the second half of 2023, we expect a possible rate hike in January, followed by a pause in March and another 25 basis points hike in May.
“If only 20% of RON95 users were subsidized, it is estimated that headline inflation would rise by only 0.9% on an annual basis,” it added. –bernama
