Policy tightening in Malaysia has paused, not finished

Bank Negara Malaysia (BNM) left policy interest rates unchanged today at 2.75%, as expected. The slowdown in GDP growth probably has further to go but we still anticipate that the upswing will regain some traction during the course of 2011. Inflation should stay contained but probably only in the context of the overnight rate moving up to the middle of a 3-4% neutral range by late-2011.

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