Deputy Governor Datuk Marzunisham Omar
KUALA LUMPUR: Bank Negara Malaysia (BNM) will continue to adopt a data-driven approach in evaluating the impact of economic developments on inflation and growth, said Deputy Governor Datuk Marzunisham Omar.
While several central banks have recently started cutting policy interest rates, BNM's monetary policy remains guided by Malaysia’s specific economic condition, he said.
"We are aware of what other central banks are doing, but our primary focus when determining monetary policy is the outlook for growth and inflation in our own economy,” he said at the 2025 BNM Governor’s Address on the Malaysian Economy and Panel Discussion, organised by the Malaysian Economic Association.
Marzunisham highlighted that some supply shocks can have a deflationary impact on growth, and that they can arise from both external and domestic factors, such as disruptions in global supply chains or policy changes within Malaysia.
"For example, if the government decides to lower the price of RON95 petrol or rationalise fuel subsidies, this constitutes a supply shock. In such cases, prices are likely to adjust accordingly,” he said.
Managing these shocks requires a delicate balance in monetary policy, taking into account both price adjustments and their effects on economic growth.
"Conventional monetary policy wisdom suggests that central banks should generally look past supply shocks, particularly when they are temporary and do not affect long-term inflation expectations,” he said.
Marzunisham noted that since 2019, Malaysia’s nominal wage growth has not kept pace with rising prices, contributing to persistent cost-of-living challenges.
For example, he said the nominal wage per worker only cumulatively increased by seven per cent, whereas during this period, overall prices increased by 9.3 per cent. Food, in particular, increased by 17.4 per cent.
In recent years, he said the country has managed to bring down the inflation rate, but the price levels remain high.
"While we address that from an inflation perspective, we also need to make sure that we try to increase wages, particularly among the lower-income households that have had to allocate a larger and increasing share of their income to basic necessities like food and housing,” he said.
To address this, he said Malaysia must explore ways to increase incomes, such as by bringing in more investments to create high-skilled and high-paying jobs. - Bernama
