Money in Malaysia

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Malaysia - Money

BNM leaves policy rate unchanged in January

At its 24 January meeting, the Monetary Committee of Bank Negara Malaysia left the overnight policy rate unchanged at 3.25%, where it has been since January last year. The decision met market expectations and came against a background of muted inflation in “the absence of strong demand pressures”.

The Committee noted that core inflation, which excludes volatile items such as oil, is unlike to rise at a robust pace. Although the Bank expects headline inflation to average above last year’s reading in 2019, the outlook is subject to downside risks and hinges on oil price movements. Oil prices are expected to remain at a low level this year and the effects of the change to consumption tax late last year will fade throughout the course of this year. Our panelists expect domestic demand to prop up inflationary pressures this year and the Bank expects it to be the key driver of economic growth this year.

Looking ahead, the majority of the FocusEconomics Consensus Forecast panel expect the Bank Negara Malaysia to stand pat this year, leaving the overnight policy rate unaltered owing to mountain downside risks to the economic outlook. These risks, which are chiefly exogenous, stem from a possible intensification in the Sino-American trade conflict after the truce ends in early March and commodity-related shocks. Moreover, the Bank struck a similar tone in the accompanying press release compared to the prior meeting, noting that it will continue monitoring risks to the outlook and future developments to ensure the underlying fundamentals of the economy remain solid and supportive of growth.

The next monetary policy meeting is scheduled for 5 March.

With inflation set to remain mild next year despite a slight uptick, there will be little pressure on the Central Bank to sharply increase rates. FocusEconomics panelists expect the overnight policy rate to end 2019 at 3.29%. In 2020, panelists see the policy rate ending the year at 3.31%.

Malaysia - Money Data

2013  2014  2015  2016  2017  
Money (annual variation in %)7.7  7.5  2.9  3.1  4.8  

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Malaysia Money Chart

Malaysia Money
Note: Annual variation of M2 in %.
Source: Malaysia Central Bank and FocusEconomics calculations.

Malaysia Facts

Bond Yield3.970.15 %Feb 14
Exchange Rate4.080.0 %Feb 14
Stock Market1,689-0.29 %Feb 14

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