UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting assessed the recent inflation figures released in the Malaysian economy.
“Headline inflation decelerated to 1.3% y/y in Feb (from 1.6% y/y in Jan), in line with our estimate (1.4%)… This was largely due to falling prices of selected food items, lower actual housing rental, and cheaper transportation costs as a result of the collapse in global oil prices and the spread of COVID-19 outbreak.”
“Reflecting our downward revision of Brent oil price forecasts for 2020 to an average of USD36/bbl (from USD66.50/bbl previously) as well as depth of expected decline in demand arising from the impact of COVID-19 pandemic and the Movement Control Order (MCO), we slash our 2020 full-year inflation forecast to a 32-year low of 0.5% (from 1.5% previously). We expect some months of deflation or declining CPI before inflation returns to sub 1% in 2H20.”
“PM Tan Sri Muhyiddin announced today (25 Mar) that MCO will be extended by another two weeks until 14 Apr (from 31 Mar), which is expected to further weigh on consumer prices and economic growth. In an effort to mitigate this impact, the government will unveil a broader, second economic stimulus package on 30 Mar. We also expect Bank Negara Malaysia to cut the overnight policy rate by another 50bps in 2Q20, as a global recession is imminent.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.