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Malaysian inflation remains weak in July, policy rate likely to stay unchanged in 2019-2020
Malaysian inflation continues to be benign in July. Sequentially, the headline inflation came in at 0.1 percent, compared with a flat print in the prior month. Food prices were the main contributor, rising 0.3 percent sequentially. Other components that sequentially gainer were housing and transportation costs.
Core inflation were up 2 percent year-on-year, its most rapid rate since January 2018. Nevertheless, similar to its headline counterpart, the acceleration was because of a low base. The monthly rise was just 0.08 percent.
“Overall, Malaysia’s inflation data continues to point to the absence of demand-pull pressures in the economy. A change in these settings is unlikely over the next few months”, said ANZ in a research report.
The data for inflation gives some leeway to Bank Negara Malaysia to cut its Overnight Policy Rate. Nevertheless, the last policy statement did not imply that a rate cut is imminent. In general, monetary policy has been quite stable in Malaysia characterised by a low amplitude for the OPR.
“We therefore, expect that the OPR to be maintained at 3.00 percent in 2019 and 2020”, added ANZ.