Macroeconomic Forecast Malaysia

As expected, Bank Negara Malaysia (BNM) left the overnight policy rate (OPR) unchanged at 2.75% in its November (the last for 2010). The central bank's latest move was consistent with the mild inflationary environment, as seen in the consumer price inflation (CPI) of 2.0% y-o-y in October, slightly higher than the 1.8% recorded in September. We forecast CPI will average 1.8% in 2010, before ticking marginally higher to 1.9% in 2011. Given that we expect price pressures to remain low next year, we maintain our view that the BNM will keep the benchmark rate unchanged at 2.75% till end-2011.

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