BANK Negara Malaysia is set to hike rates by 25 basis points on Wednesday, the first consecutive rise since 2010, as it moves to suppress inflation caused partly by a weaker ringgit, Reuters reports.

The central bank last raised its key overnight policy rate by 25 basis points to 2.00% at its May meeting.

The news site reported that all 22 economists polled from June 27 to July 1 predicted that rates would be increased by another 25 basis points to 2.25% at the Wednesday meeting.

Twelve of 22 others polled forecast another 25-basis point hike in September to 2.50%, and the remaining 10 reportedly do no see a change after the hike this Wednesday.

“BNM will be mindful of potential upside pressure to inflation stemming from recent increases in minimum wages, upward adjustments in price ceilings for certain food products, and a pickup in demand-pull inflation on the back of economic reopening,” Derrick Kam, Asia economist at Morgan Stanley, said.

Malaysia’s inflation rose to 2.8% in May from 2.3% in April. The portal reported that ringgit lost ground last quarter and has weakened nearly 6% so far this year.

“The ringgit has been falling against the greenback due to aggressive rate hikes by the US Federal Reserve, and raising the overnight policy rate will help to shore up the currency by maintaining the interest rate differential,” Moody’s Analytics economist Denise Cheok reportedly said. – July 4, 2022.