Malaysia’s monetary tightening has not ended

Bank Negara Malaysia (BNM) kept its policy rate at 3.0% today whereas both we and the consensus had anticipated a 25bp hike. Malaysia’s central bank instead opted to raise its reserve requirement ratio by 100bp to 4.0%. The chance that BNM stays on the sidelines for a while has risen, but we still expect inflation concerns to bring more policy-rate tightening this year.

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