Home ›› 18 Jan 2022 ›› Asia Biz
Malaysia's central bank will wait until at least July before raising interest rates from a record low as it waits for the economic recovery to take hold, a Reuters poll found.
Although inflation climbed above Bank Negara Malaysia's (BNM) 2pc-3pc outlook range in November, it was expected to fall back within that range in the coming months, giving the central bank room to hold fire on rate hikes for now.
The Jan. 10-14 poll of 23 economists suggested the BNM will keep its overnight policy rate at 1.75pc until the end of June. All 23 expect no change on Thursday.
"The Bank Negara Malaysia will remain accommodative to support growth at least until mid-2022 when we expect the recovery to become self-sustaining," noted Debalika Sarkar, an economist at ANZ.
"We expect the first rate hike only in Q3 2022 and this will be more symptomatic of policy normalisation than tightening,"
That view was in line with median predictions in the poll. Economists forecast the central bank would raise its key interest rate to 2.00% in the third quarter.
Headline inflation rose to 3.3pc in November due to global supply chain disruptions and rising fuel prices but it was expected to stabilise this year and next. It was forecast to cool from 2.5pc in 2021 to 2.1pc and 2.0pc this year and next.
However, supply chains could be further impacted by the Covid-19
pandemic.
Indeed, six of seven respondents who answered an additional question said risks to their inflation outlook were skewed more to the upside.
"Supply disruptions appear to be easing but could get worse if the pandemic forces more lockdowns in major economies," said Vincent Loo, senior economist at KAF Investment Bank.