KUALA LUMPUR: Further improvements in the supply chain and a reduction in global demand may help to keep inflation within the 2.5-3.0 per cent range next year, says Kenanga Research.
Despite expectations of a deceleration in global growth next year, Malaysia's gross domestic product is projected to continue its expansion, potentially growing by more than 4.0 per cent year-on-year (y-o-y), it said.
"With domestic inflation anticipated to remain comfortably below the 3.0 per cent threshold on average, we foresee no inclination for rate cuts on the Bank Negara Malaysia’s (BNM) agenda.
"Consequently, the BNM is likely to uphold the status quo, maintaining the overnight policy rate at 3.00 per cent throughout 2024,” it said in a note today.
Nevertheless, the research house anticipates Malaysia’s headline inflation to maintain a 0.1-0.2 per cent month-on-month growth, driven by the potential resurgence of food prices amid the looming possibility of a stronger El Nino weather phenomenon in 2024.
This, along with other external factors such as escalating geopolitical tensions, poses an additional risk of pushing prices higher.
"On the domestic front, the confluence of the government's subsidy rationalisation plan, an increase in services tax, and the implementation of the progressive wage model is expected to heighten Malaysia's inflationary pressures,” it said.
Last Friday, the Department of Statistics Malaysia said the country’s November headline inflation slowed to 1.5 per cent y-o-y (Oct:1.8 per cent), a 33-month low and below Kenanga Research’s and market estimate of 1.7 per cent due to lower-than-expected food prices. - Bernama
