Malaysia’s consumer price inflation likely remained unchanged in December
Source: FxWire Pro - Commentary / 22 Jan 2018 11:25:03 Eastern Standard Time
Malaysia’s consumer price inflation is expected to have remained nearly unchanged in December 2017. According to a DBS Bank research report, the headline inflation is likely to have come in at 3.5 percent year-on-year in December. Base effects and lack of domestic/imported inflationary pressure are keeping inflation below the mark of 4 percent.
But the central bank, in its most recent policy statement has hinted at monetary normalization. This is consistent with the view that the policy stance would move towards a tightening bias in 2018, while risks of a policy move as this week cannot be discounted, stated DBS Bank. However, much depends on inflation that is expected to remain low.
“The authorities have more than just the Overnight Policy Rate in its policy tool bag and could well raise the Statutory Reserve Requirement Ratio (SRR) before executing a rate hike per se”, added DBS Bank.
The Malaysian central bank had first cut the SRR by 50 basis points to 3.5 percent in February 2016 before officially cutting the OPR by 25 basis points in July 2016. The SRR is expected to be hiked by 50 basis points to 4 percent, before two rate hikes of 25 basis points in the months ahead, said DBS Bank.
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