by ANIS HAZIM / pic by MUHD AMIN NAHARUL

BANK Negara Malaysia (BNM) will lift its policy rate by 25 basis points (bps) to 2.25% at its July meeting, according to Moody’s Analytics.

In May, BNM hiked the rate by 25bps to 2% from a record low of 1.75% where it had languished for nearly two years.

“Rising inflation pressures caused by higher global commodity prices and supply-chain disruptions have pushed Malaysia’s central bank to tighten.

“With domestic conditions firming as the economy reopens, BNM can begin reducing the degree of monetary accommodation,” Moody’s Analytics said in a report today.

Meanwhile, the Reserve Bank of Australia (RBA) will also lift its cash rate by 50bps at its July meeting, bringing it to 1.35%.

Moody’s Analytics noted that RBA is seeing the driver for stronger price pressures which evolved substantially in recent months.

“The central bank now acknowledges that it is not just about imported supply-side factors such as higher energy prices,” it said.

The research body views that domestic factors are increasingly at play, particularly, the tight labour market as the unemployment rate is sitting at its lowest level in almost 50 years.

“This is putting an upward pressure on wage growth, particularly in the private sector where firms need to pay more to attract and retain talent.”

Elsewhere, China’s M2 money supply had likely accelerated in June, reflecting government stimulus to shore up domestic demand.

“We forecast China’s GDP growth to come in at 4.5% this year. The country will need fiscal and monetary stimulus if it is to achieve this,” it added.

To note, the People’s Bank of China has pledged to “take actions whenever necessary” and continue its accommodative monetary policy stance.

“Infrastructure spending and local government bond issuance have increased, and targeted fiscal measures such as cash support for firms that hire college graduates have rolled out,” Moody’s Analytics noted.