Malaysia Faces Near-Term Inflationary Pressure

Dow Jones
Sep 18

0926 GMT - Malaysia's near-term inflationary pressures could be driven by global commodity price volatility, the impact of a super El Nino and base effects, UOB economists Julia Goh and Loke Siew Ting say in a note. UOB projects 2026 inflation at 2.0%, with risks skewed to the upside. Brent crude prices above $100 a barrel amid Middle East tensions and shipping disruptions could raise imported inflation, while a strong El Nino could push up food prices. However, government measures to cushion higher fuel and electricity costs should help contain price pressures, they add. Elevated external interest rates, resilient domestic growth and expected support from a more expansionary 2027 budget strengthen the case for Bank Negara to raise its policy rate by 25 bps to 3.00% at its November meeting, followed by a pause through 2027.

 

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