Macroeconomic Forecast Malaysia

June 2008 | Macroeconomic Forecasts

As anticipated, Bank Negara Malaysia (BNM) kept its overnight policy rate on hold at 3.50% at its most recent meeting on May 26, despite consumer price inflation accelerating to a 15-month high of 3.0% y-o-y in April. Despite remaining low by regional - and indeed global - standards, inflation continues to tick higher in Malaysia on the back of rising food and fuel prices, posing a rising threat to the country's current domestic demand boom as higher prices eat into disposable incomes. Indeed, food prices, which hold a 31.4% weighting in Malaysia's CPI basket accelerated for the third consecutive month in April, climbing to 5.7% y-o-y from 4.9% a month earlier, and look set to continue heading north over the coming months.

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