Maybank Revises Its Inflation Forecast To 4pc For 2015

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KUALA LUMPUR, Jan 23 – Maybank has revised its inflation forecast to 4 per cent in 2015 from 4 to 5 per cent previously. This follows the postponement of the scheduled electricity tariff hike and industrial sector’s gas price reviews for this year. The low coal prices now will enable the government to keep the tariff at the current level.

Maybank expects to see lower retail fuel prices in 2015 from the “managed float” pricing mechanism although it does not expect to see an immediate pass through to the consumers. Fuel prices were further reduced on January 1, 2015 following continued decline in crude oil prices in December 2014. Retail prices for RON95 and RON97 were reduced to RM1.91/litre (Dec 2014: RM2.26/litre) and RM2.11/litre (Dec 2014: RM2.46/litre), respectively.

Diesel price was also reduced to RM1.93/litre from RM2.26/litre in Dec 2014. “Despite the favourable effect of lower global crude oil prices on domestic fuel prices that is now no longer subsidised and on manage float mechanism, we still expect inflation rate to be heavily influenced by the introduction of the broader-based GST resulting in more goods and services being taxed.”

Maybank has also revised its 2015 global oil price assumption to US$50-55 per barrel from US$70-75 per barrel earlier (2014: US$101 per barrel) on continued global oil excess of supply while demand remains low. According to the Statistics Department, the Consumer Price Index (CPI) slowed in December 2014 to 2.7 per cent year-on-year from 3.0 per cent in November and the full year 2014 inflation settled at 3.2 per cent.

The growth was mainly due to slower increase in prices of food and non-alcoholic beverages as well as transport on lower fuel prices under managed float mechanism following the end of blanket subsidy. Meanwhile, Maybank expects Bank Negara Malaysia (BNM) to keep the Overnight Policy Rate (OPR) at 3.25 per cent in 2015.  

“In view of the slower growth projection, we now expect BNM to maintain the OPR at 3.25 per cent this year against our previous view of a possible 25 basis points increase in the final Monetary Policy Committee meeting on November 4 and 5, 2015.”

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