Bank Negara Malaysia Expected to Maintain Interest Rates Amid Inflation Concerns
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Loading... - Dongmei Fu
- 06 Sep 2024
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Bank Negara Malaysia (BNM) is expected to keep its overnight policy rate steady at 3.00% for the remainder of 2024 and 2025, despite rising inflation concerns. The central bank's cautious approach is driven by the country's robust economic performance in the first half of 2024, with GDP growth accelerating to 5.9% year-on-year in the second quarter.
While BNM expressed optimism about Malaysia's economic outlook, citing strong domestic demand and improved export performance, it acknowledged the uncertainty surrounding inflation. The headline inflation rate remained modest at 2.0% year-on-year in July, but upcoming cuts to long-standing fuel subsidies could push inflation higher. Analysts expect the inflation rate to climb to 3% by the end of the year, exceeding the five-year average.
Despite these inflation concerns, BNM is unlikely to make any further rate adjustments in the near term. The central bank's measured approach to monetary policy is aimed at maintaining a steady course amid global uncertainties. While some analysts forecast potential rate cuts next year if inflationary pressures subside or growth slows, most expect BNM to maintain its current interest rate stance.
BNM's decision to hold interest rates steady is seen as a positive move, as it will help to support the country's economic growth while keeping inflation in check. The central bank's cautious approach is expected to continue, with a focus on ensuring a stable and sustainable economic environment for Malaysia.
