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Malaysia Policy Rate 3.0% (consensus 3.0%) in Jul-24

• Bank Negara Malaysia maintained the OPR at 3.00%, aligning with the economic consensus amid a cautious approach to managing inflation and supporting economic growth.
• Future interest rate policies will be influenced by global economic stability, the strength of the domestic tech upcycle, and the impact of domestic policy measures on subsidies and price controls.
• Inflation is expected to rise moderately in the second half of 2024 due to subsidy rationalization. Still, overall pressures are mitigated by targeted measures to support businesses, with headline and core inflation projected to average between 2.0% - 3.5% and 2.0% - 3.0%, respectively.

Malaysia CPI Inflation 2.0% y-o-y (consensus 1.9%) in May-24

- Malaysia's CPI inflation in May 2024 was 2.0% y-o-y, slightly exceeding the consensus estimate and marking the highest growth rate since June 2023.
- The CPI growth, while the M3 money supply is up by 6.1% y-o-y, indicates potential upward pressures on consumer prices, warranting close attention by monetary policymakers.

Malaysia CPI Inflation 1.8% y-o-y (consensus 1.9%) in Apr-24

- Malaysia's CPI inflation in April 2024 remained at 1.8% y-o-y, contrary to the consensus expectation of a rise to 1.9%.
- The current rate is only 0.1 percentage points lower than the one-year average, confirming broader stability at a near-target inflation rate.

Malaysia Policy Rate 3.0% (consensus 3.0%) in May-24

• The decision by Bank Negara Malaysia to maintain the OPR at 3.00% aims to balance the need to support economic growth while managing domestic inflation amid complex global economic challenges, including persistent inflation and geopolitical tensions.
• Moderate inflation levels in early 2024 and a positive economic growth outlook underscore the effectiveness of the current monetary policy—however, the policy trajectory links to developments in subsidy and price control measures and global economic conditions.
• The ringgit's valuation and stabilization are critical concerns for the MPC, influenced by external monetary policies and geopolitical factors, with ongoing strategic interventions to align the currency more closely with Malaysia's economic fundamentals.