Malaysia’s headline inflation to moderate to 2.7 pct in 2018

KUALA LUMPUR: Malaysia’s headline inflation is expected to normalise to 2.7 per cent in 2018, easing from the 3.8 per cent estimated in 2017, said RHB Research Institute in a statement today.

The research firm also said it expected Bank Negara Malaysia (BNM) to raise the overnight policy rate (OPR) this year.

“As inflation is likely to be elevated and economic growth remains relatively strong, we are of the view that BNM will increase the OPR by 25 basis points to 3.25 per cent this year, after maintaining it at 3.00 per cent in 2017.

“This comes as major global central banks are increasingly inclined to tighten monetary policies this year, amid stronger growth in advanced economies,” it said.

It envisaged that the annual growth in broad money to pick up to 5.0 per cent in 2018, from the +4.8 per cent estimated for 2017, in line with sustained economic growth.

Meanwhile, it said loans growth would likely record a healthy 6.0 per cent in 2018, from the +5.0 per cent expected in 2017, due to stronger business loans following an uptick in economic activity, but would be partly offset by slower household loans amid a soft property market.

“Despite the healthy growth in money supply, we do not expect it to result in significant demand-pull pressure on prices,” it added. — Bernama