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MALAYSIA: Better than Expected CPI Gives Room for Rate Cut. 

MALAYSIA
EM BulletBulletAPACEmerging Market News
  • Malaysia’s November CPI was better than expected at +1.8% y/y, down from October’s +1.9% y/y and estimates of +2.1% y/y.
  • November’s Core inflation was +1.8% y/y.
  • Food and Alcoholic beverages were +2.6% y/y, housing, water and electricity +3.2% y/y with communication the biggest decline down -3.9%.
  • Escalating medical inflation has prompted insurance companies to propose a hike in insurance premiums of between 40% and 70% next year, risking many people unable to afford insurance and prompting calls for the BNM to cap price increases.
  • Today’s CPI provides short term relief to rising prices and potentially opens the door for rate cuts next year by the BNM whose next meeting is not until January 22, 2025.
  • The bond market liked the CPI data release with the 3YR MGS down 6bps to 3.506%.
  • Malaysia has the least amount of rate cuts priced into its bond curve at just 27bps over a 1-year time horizon, with only 6bps of cuts priced in on a three month time horizon. 
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  • Malaysia’s November CPI was better than expected at +1.8% y/y, down from October’s +1.9% y/y and estimates of +2.1% y/y.
  • November’s Core inflation was +1.8% y/y.
  • Food and Alcoholic beverages were +2.6% y/y, housing, water and electricity +3.2% y/y with communication the biggest decline down -3.9%.
  • Escalating medical inflation has prompted insurance companies to propose a hike in insurance premiums of between 40% and 70% next year, risking many people unable to afford insurance and prompting calls for the BNM to cap price increases.
  • Today’s CPI provides short term relief to rising prices and potentially opens the door for rate cuts next year by the BNM whose next meeting is not until January 22, 2025.
  • The bond market liked the CPI data release with the 3YR MGS down 6bps to 3.506%.
  • Malaysia has the least amount of rate cuts priced into its bond curve at just 27bps over a 1-year time horizon, with only 6bps of cuts priced in on a three month time horizon.