Macroeconomic Forecast Malaysia

The consumer price inflation (CPI) for Malaysia came in at 1.8% y-o-y in September, decelerating from the 2.1% figure recorded in August. The largest contributor to inflationary pressures was 'food and non-alcoholic beverages', responsible for 50.8% of the overall rise in the inflation index. Overall, we believe the recent strengthening of the Malaysian ringgit has helped curtail imported inflation. This should provide further leeway for Bank Negara Malaysia (BNM) to maintain the overnight policy rate (OPR) at a more accommodative level, which we believe should remain unchanged for the rest of 2010.

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