Malaysia's inflation may have peaked: Zeti

Malaysia’s inflation has probably peaked and price pressures may ease as the global economy deteriorates, central bank Governor Tan Sri Zeti Akhtar Aziz said, joining neighbours in signaling less pressure to tighten policy.

“Right now, we have to wait for greater clarity on the outlook for growth and inflation before taking any further adjustments” on interest rates, Zeti said in an interview in Washington late yesterday.

“Given the more moderate global growth and in terms of the external environment and its implications on the domestic economy, we believe domestic sources of inflationary pressures will be less.”

Interest rates are still at a level that is supportive of growth, which may be “about the same or slightly better” in the second half of this year compared with the first, Zeti said.
The economy grew at the slowest pace since 2009 last quarter. The government will give updated forecasts for growth in 2011 and 2012 when the annual budget is unveiled next week, she said.

Europe’s debt crisis and a weakening U.S. recovery are threatening growth in Asia as demand for the region’s exports eases. Central banks from South Korea to the Philippines have refrained from rate increases in recent months, with Bank Negara

Malaysia keeping the benchmark overnight policy rate at 3 percent this month after four increases from early March 2010 to May this year.

Malaysia’s inflation slowed in August for the second straight month to 3.3 per cent. Consumer prices will probably rise 3 percent to 3.5 per cent in 2011, Zeti said. - Bloomberg