Malaysia: Surprise hike, but further tightening unlikely

Malaysia’s central bank (BNM) unexpectedly raised its main policy rate (OPR) today by 25bps (to 3.0%), citing the resilient economy as grounds to “further normalise the degree of monetary accommodation”. However, with inflation set to fall back further and the economy likely to struggle over the coming months we expect today’s rate hike to mark an end to the tightening cycle.

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