KUALA LUMPUR, 11 November (Bernama) — Inflation is likely to remain high, but Malaysia does not expect a recession in 2023, due to improved economic growth.
Tan Sri Nor Shamsiah Mohd Yunus, Governor of Bank Negara Malaysia (BNM), said Malaysia has begun to see signs of demand-driven inflation amid a high deposit environment.
As a result, she stated, the central bank aims to avoid a situation in which broad base price value is induced excessively, as it is in higher-income countries.
“We do see some challenges to growth in 2023, particularly on the external front, with global growth slowing, but I would like to emphasise that we are not expecting a recession,” the governor said.
She also stated that high inflation erodes people’s purchasing power and savings, so the BNM is mitigating the risk through gradual policy rate adjustments, but that moderate policy changes may take time to be fully transmitted to the economy.
“We cannot wait until inflation reaches dangerous levels before acting.” If this occurs, the overnight policy rate (OPR) will need to be raised much more quickly and significantly.