'Just like what Bob Bursa always says: if the economic data is positive, then interest rates can go up and vice versa.'
Malaysia's good economic growth is expected to be the main catalyst for continued policy tightening by Bank Negara Malaysia (BNM).
The basis was presented by Finance Minister, Tengku Zafrul Aziz in an interview regarding the prospect of policy tightening next year ahead of the release of gross domestic product (GDP) data on 11 November.
He commented that the Federal Reserve (Fed) has implemented an increase of 75 basis points while BNM only 25 basis points and the difference could affect the value of the currency if it lasts.
Therefore, the country's 3rd quarter GDP data which is expected to be strong this week could give room for policy tightening to continue at next year's meeting.
It is also in line with BNM's aspiration to return the rate to the pre-pandemic benchmark of 3%.
As information, BNM has raised the overnight policy rate (OPR) by 25 basis points 4 times in a row to bring the overall rate to 2.75%.
In the meantime, on a year-on-year basis, the country's GDP is expected to increase to 12.1% in the 3rd quarter with annual growth forecast at 5.3% to 6.3%.
Sticking to the projection, Tengku Zafrul did not rule out the possibility that BNM will raise rates again when the country's GDP grows well because it indicates that the economy is able to absorb pressure.
On the other hand, central banks around the world continue to be under inflationary pressures while trying to support growth.
Based on a survey conducted, almost 80% of respondents expressed the need for the government to support the economy and curb the high cost of living.
