KUALA LUMPUR: CIMB Economics Research said Malaysia's headline inflation is expected to edge higher from 1.4% in 1H10 to an estimated 2.0% in 2H10 due to the one-off hike in transport prices as well as higher food prices.
It said on Thursday, Dec 23 that going into 2011, inflationary pressures will persist owing to improving domestic demand, firmer commodity prices and rising food prices.
'There is also upside risk emanating from the continued rationalisation of subsidies. We expect overall CPI growth to average 1.7% this year and 3.0% in 2011,' it said in a report.
CIMB Economics Research said due to lingering external risks and moderating growth, it expects interest rates to stand pat in 1H11. Thereafter, as the economy starts to gain momentum, Bank Negara Malaysia may resume normalizing interest rates to keep a lid on inflation as well as to prevent a credit-financed bubble from emerging.
'We expect the overnight policy rate to hit 3.25% by end-2011 (from current level of 2.75%),' it said.
It said on Thursday, Dec 23 that going into 2011, inflationary pressures will persist owing to improving domestic demand, firmer commodity prices and rising food prices.
'There is also upside risk emanating from the continued rationalisation of subsidies. We expect overall CPI growth to average 1.7% this year and 3.0% in 2011,' it said in a report.
CIMB Economics Research said due to lingering external risks and moderating growth, it expects interest rates to stand pat in 1H11. Thereafter, as the economy starts to gain momentum, Bank Negara Malaysia may resume normalizing interest rates to keep a lid on inflation as well as to prevent a credit-financed bubble from emerging.
'We expect the overnight policy rate to hit 3.25% by end-2011 (from current level of 2.75%),' it said.
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