Thursday 28 Mar 2024
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KUALA LUMPUR (Aug 24): AmBank Research has maintained its 45% chance for a 25 basis points rate hike sometime in 4Q2017 should the potential incomipng data justify such a need.

In an economic update this morning, AmBank Group chief economist Anthony Dass said Malaysia’s headline inflation remained below the 4% growth for the third consecutive month.

He said that in July, inflation rose 3.2% year-on-year (y-o-y) while the core inflation rose marginally to 2.6% y-o-y.

“We believe part of the slower gain in the headline inflation was due to lower fuel prices, reflected by the average price of RON95 petrol at RM1.958 per litre in July 2017 and a stable ringgit/USD averaging at 4.288 in July.

“With the 1H2017 average consumer price index (CPI) at 4.1% y-o-y, we now expect the 2H2017 to be much lower around 3.0% – 3.3%,” he said.

Dass said on that note, he has revised downwards his 2017 full-year average inflation from 4.0% to 3.5% – 3.7%.

“Still, we feel the real returns will remain negative although there are possibilities for the inflation to dip below the 3.00% overnight policy rate (OPR) in some of the months as we move forward.

“Thus, our base case of no change in the OPR at 3.00% in 2017 remains and we maintain a 45% chance for a 25bps rate hike sometime in 4Q2017 should the potential incoming data justify such a need,” he said.

 

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