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KUALA LUMPUR: The central bank of Malaysia is expected to leave its key rate unchanged at a meeting on Wednesday, while growth remains firm and that a decline in inflation in the short term is expected after the new government has withdrawn The ten economists polled by Reuters predict that Bank Negara Malaysia (BNM) will maintain its overnight rate at 3.25%.
In contrast to Indonesia and the Philippines, Malaysia increased its policy rate once this year by 25 basis points in January
This increase was the only increase since July 2014.
Wednesday's meeting will be the second since the May 9 elections that brought about a change of government and the return of Tun Dr. Mahathir Mohamad, prime minister from 1981 to 2003, as prime minister.
This will be the first BNM policy meeting with Datuk Nor Shamsiah Mohd Yunus as governor. She took office on July 1st.
Shortly after taking office, Mahathir terminated the 6% Goods and Services Tax (GST) tax imposed in 2015, which contributed to the increase in living costs. Seri Najib Abdul Razak and his long-standing coalition
The scrapping of the GST is likely to result in a significant drop in the inflation rate, which is expected to average around 1% in the second half of 2018, said Capital Economics in a note
. , he says, "another rate hike is probably off the table."
In May, BNM said the removal of the GST would have an impact on inflation, but it was too early to say how much. The May annual inflation rate was 1.8%
Standard Chartered, in a note on Friday, said the external pressure could push the central bank to raise its key rate. if it became a drag on ringgit money, even if it did not say when it could happen.
The ringgit was trading at 4.033 for a dollar at noon today. It has weakened by about 4.5% since April 2, a peak for the year.
StanChart maintained his forecast for economic growth for the year 2018 at 5.3 percent, saying the pace would "moderate solid levels in 2017, but remain firm."
Before the elections, the BNM forecast growth of 5.5% to 6% in 2018 and has not made any new forecasts since the vote.
The government announced a growth of 5.9% in 2017. – Reuters
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