Inflation in the country remains high and the Bank Negara’s interest rate hike in January is almost a certainty.
The Consumer Price Index (CPI), or inflation as it is commonly known, remained at 4% in November, or 3.90% above market expectations, according to data released by the Department of Statistics Malaysia. Our inflation rate for food and non-alcoholic beverages reached 7.3%.
Our core inflation rate of 4.20% in November was higher than the previous rate of 4.10%. The so-called core inflation rate is the inflation rate after excluding goods that are prone to price fluctuations, which are usually difficult to bring down once the prices of these goods have risen.
Since our inflation rate is slow to come down, the National Bank will have no choice but to continue to raise interest rates in the coming January in order to regulate commodity prices by reducing demand.
If the National Bank raises interest rates by another 0.25% in January, our overnight policy rate (OPR) will be 3.00% p.a. Economists believe that the National Bank’s rate hike on January 19 is almost a foregone conclusion. Interest rates on car loans and home loans will follow suit by then.
