Bank Negara: Focus is on ensuring growth

MALAYSIAN inflation has peaked and the greater focus now is on ensuring economic growth, central bank chief Tan Sri Dr Zeti Akhtar Aziz said today.

“Our assessment is that inflation has peaked and will continue to moderate going into next year, and especially more significantly going into the second half of the year that it may decline to below 3 per cent,” Zeti said in an interview.

Asked if the greater task was now to ensure continued economic growth, she said: “Yes.”

The central bank has kept its key interest rate steady at 3.50 per cent for about 2-1/2 years despite a spike in food and fuel price inflation.

But some analysts say the central bank could cut rates for the first time in five years when it holds its regular interest rate meeting on Monday, as the darkening global outlook weighs on consumer demand.

Five of 11 economists polled by Reuters this week expect a rate cut on Monday, up from three in last month’s poll.

Meanwhile, Second Finance Minister Tan Sri Nor Mohamed Yakcop said Malaysia is confident of achieving a 3.5 percent gross domestic product (GDP) growth next year though the economies of Asian countries like Japan, Hong Kong and Singapore are facing recession.

“The situation as we expected is quite dire. The United States appears to be badly affected with the unemployment rate expected to rise to 8.0 per cent from 6.5 per cent,” he told reporters after officiating the Young Entrepreneurs Association of Malaysia Forum in Petaling Jaya today.

According to him, the country’s exports will be slightly affected with the US and Europe importing less.

Nor Mohamed said Malaysia, however, could depend on trading partners like China and India as the two countries were still recording positive growth of 7.0 to 9.0 per cent.

“This protects us because we are not dependent on the Western countries for exports,” he said. - Reuters, Bernama