KUALA LUMPUR: Malaysia’s economic growth will provide the central bank with more room to tighten monetary policy as the Federal Reserve (Fed) increases interest rates, says caretaker Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz.
Gross domestic product (GDP) data to be released this week will show the economy was stronger than expected in the third quarter, he said in an interview on Saturday.
Bank Negara increased its benchmark interest rate for a fourth straight meeting last week. At 2.75%, the rate remains below pre-Covid level of 3%, Tengku Zafrul said while on a campaign trail in his constituency of Kuala Selangor for the Nov 19 general election.
“We raised it by 25 basis points but the US Fed raised by 75 basis points,” the minister said.
“The differential is still large, almost 200 basis points” though the United States is fighting inflation more than Malaysia, he said.
The central bank is projecting full-year growth to be at the upper end of its 5.3% to 6.3% forecast. It will release third-quarter GDP data on Nov 11.
“Our GDP growth is still strong despite the four rate hikes,” Zafrul said. With growth stronger than expected, “that leaves the central bank with more room on monetary policy,” he said. — Bloomberg
