Higher cost pressure ahead: AmResearch


  • Business
  • Thursday, 19 Sep 2013


KUALA LUMPUR: News that inflation grew by just 1.9% year-on-year in August, slightly below August’s 2%, was broadly in line with consensus expectations of 2%, but AmResearch is warning of higher cost pressure ahead.

“On a year-to-date basis, inflation increased by a modest 1.7% as overall cost pressure and prices paid by producers have been subdued, backed by ongoing subsidies. However, inflation will pick up in the coming months and consumer prices will probably rise by 3% in September due to adjustment in petrol pump prices,” it said.

Be that as it may, AmResearch is keeping to its inflation growth projection of 2.2% for 2013.

It said Bank Negara was likely to retain the Overnight Policy Rate at 3% at the final Monetary Policy Committee meeting on Nov 7 but envisages a rise of 25 basis point in interest rate in the second half of next year on the back of higher cost pressure.

Meanwhile, AmResearch thinks the Federal Reserve’s decision to continue its US$85bil-a-month bond-buying programme will result in a rebound in regional currencies. 


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