Breaking News
Investing Pro 0
Cyber Monday SALE: Up to 54% OFF InvestingPro+ CLAIM OFFER

Malaysia central bank to deliver two more 25-bp rate hikes this year

Economy Sep 05, 2022 08:15PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A man walks past the entrance of Central Bank of Malaysia (Bank Negara Malaysia) in Kuala Lumpur, Malaysia, July 31, 2019. Picture taken July 31, 2019. REUTERS/Lim Huey Teng

By Devayani Sathyan

(Reuters) - Malaysia's central bank will deliver a third consecutive 25 basis point interest rate hike on Thursday and a fourth in November to quell growing inflationary pressures but will opt to move slowly despite a hawkish U.S. Federal Reserve, a Reuters poll found.

Although Malaysian inflation rose to 4.4% in July, well above the target range of 2-3%, it is relatively moderate compared with other Southeast Asian countries, allowing the central bank to move at a slower pace.

Bank Negara Malaysia (BNM) has raised rates by a modest 50 basis points since May to 2.25%.

All but one of 20 economists in the Aug. 30-Sept. 5 Reuters poll forecast BNM to hike by 25 basis points to 2.50% at its Sept. 8 meeting. If realised, it would be the first time since 2010 the central bank raised rates three times in a row.

One economist expected a 50 basis point hike.

"Given a robust GDP growth print in 2Q22, signs of further economic expansion in 2H22 albeit at a moderate pace, and broadening second-round effects on inflation, Bank Negara Malaysia will likely follow-through with a third 25bps rate hike," noted Julia Goh, senior economist at UOB.

"Besides internal factors, we believe the expected outsized Fed rate hikes in the coming months and global monetary conditions would also be taken into consideration by BNM at the September meeting."

Eighty percent of respondents, 16 of 20, forecast another 25 basis point hike at the November meeting and the median showed it at 2.75%.

Nearly 60% of economists, 11 of 19, who had a long-term view on rates expected the overnight rate to reach 3.00% by end-March. The remaining eight said 2.75%.

If the majority view prevails, interest rates would be where they were before the pandemic. They were then expected to stay unchanged until the end of next year at least.

A net exporter of oil, Malaysia's economy grew 8.9% in the April-June quarter, the fastest pace in a year. Robust growth along with signals of further U.S. Fed rate hikes will nudge policymakers to continue tightening.

Still, with the risks of a sharp slowdown in China, Malaysia's biggest trading partner, economists only expect the pace to be modest.

"Bank Negara Malaysia's preference for gradual policy rate hike adjustments balances a recovering domestic economy that faces downside global growth risks and rising inflation pressures," noted Han Teng Chua, economist at DBS.

Malaysia central bank to deliver two more 25-bp rate hikes this year
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email