Bank Negara Malaysia (BNM) left the overnight rate unchanged today at 2.75%, as expected. Nevertheless, few will now have any doubts about the durability of the economic upswing while even the BNM acknowledges that the policy rate at its current level is still “accommodative”. The risk that inflation develops into a problem in coming quarters looks far higher than any future threat to growth. Accordingly, further rate hikes are only a matter of time and we expect a hike in March.