Malaysia Central Bank Will Deliver 25Bp Rate Hikes

According to Reuters poll, Malaysia ‘s central bank will deliver a third consecutive 25 basis point interest rate hike. The interest rate hike was in conjunction with the inflationary pressure. Despite US Federal Reserve carrying out some drastic measures to combat inflation, the inflation remains serious.

Malaysian inflation rose to 4.4% in July. It is above the target range of 2 to 3%. However, the inflation in Malaysia is relatively mild and moderate compared to other Southeast Asian countries. Therefore, the central bank moved at a slower pace.

Malaysia Central Bank is Expected to Raise Interest Rate

Malaysia Central Bank Will Deliver 25Bp Rate Hikes

Since May, Bank Negara Malaysia has raised rates by 50 basis points to 2.25%. The Reuters poll estimated that the Malaysian central bank will raise the interest rates 3 times in a row. This will be the first time since 2010 when the central bank raised the interest rates consecutively 3 times in a row.

One of the economists expected the central bank to raise the interest rate by 50 basis points due to the sign of economic expansion at a slower rate as well as the US Federal Reserve interest rate hikes. However, 80% of the respondents expected that there will be a 25 basis point hike at the November meeting.

From a longer-term perspective, nearly 60% of the economists expected that the rates will reach 3% by the end of March. Due to the restrictive measures in China, Malaysia’s economic growth is significantly affected as China is Malaysia’s biggest trading partner.

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