“If the current economic conditions performs above expectation throughout the second half of 2017, then the discussion over the possibility of higher interest rates might be revisited next year”
KUALA LUMPUR: Bank Negara Malaysia (BNM) is expected to leave the country’s monetary policy unchanged, said an analyst.
FXTM vice-president for corporate development and market research Jameel Ahmad said considering the local economy’s stronger-than-expected performance this year, the bias for an interest rate cut is greatly reduced.
“There is no real reason for a change in the interest rate policy at this time. When you factor in the combination that both inflation pressures have cooled and the ringgit is rebounding, there is less encouragement to justify that higher interest rates are required,” he said in a statement.
The monetary policy meeting will take place on July 13 where optimism over the health of the Malaysian economy is booming after the Ministry of International Trade and Industry (MITI) reported another impressive trade balance report for May, last Friday.
Malaysia’s trade grew by 31.5% to RM153.3bil in May 2017, up from the RM116.6bil, recorded in the same month of last year.
“With both annualised imports and exports coming in at above 30 per cent, there is further optimism that the Malaysian economy has carried through the same robust momentum that saw the economy expand above expectations in the first quarter (Q1) of 2017 into Q2, and this should also support the bias to leave the monetary policy unchanged.
“If the current economic conditions performs above expectation throughout the second half of 2017, then the discussion over the possibility of higher interest rates might be revisited next year,” added Jameel.