Bank Negara shifts back into tightening mode

Malaysia’s central bank (BNM) left its policy rate unchanged at 2.75% today, in line with the consensus view but contrary to our expectations of a hike. Nonetheless, BNM resumed policy tightening by raising the statutory reserve rate (SRR) by 100bp to 2%. Inflation risks outweigh any concerns for growth. We expect the overnight rate to be hiked at the next BNM meeting in May.

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