Malaysia: Price pressures and policy hold – UOB
UOB economists Julia Goh and Loke Siew Ting note Malaysia’s May headline inflation rose to 2.0% year-on-year, the highest since July 2024, driven by Food, Housing, Utilities and Transport. Year-to-date inflation of 1.7% supports their full-year 2.0% forecast. They highlight supply-side shocks from the Middle East conflict and El Niño, but expect Bank Negara Malaysia to keep the Overnight Policy Rate at 2.75% through 2026.
Inflation risks but policy steady
"Year-to-date (ytd) inflation of 1.7% over Jan–May 2026 supports our full-year forecast of 2.0% (BNM est: 1.5%–2.5%; 2025: 1.4%). While the preliminary US–Iran peace MOU may help ease tensions in the Middle East, cost pressures are likely to remain elevated in the near term."
"Additionally, the onset of El Niño from Jun 2026 to mid-2027 is expected to lift crop prices, posing upside risks to inflation, despite continued fuel subsidies contingent on oil prices remaining below USD200/bbl."
"With core inflation continuing to ease—indicating softer domestic demand—alongside manageable headline inflation given ongoing subsidies and lower global energy prices contingent on easing oil supply security risks, Bank Negara Malaysia (BNM) will likely maintain a watchful hold on the key policy rate, while remaining attentive to evolving external risks and adjusting policy settings as necessary."
"In summary, prevailing price pressures remain largely driven by supply-side factors, while the continued moderation in core inflation points to softening domestic demand conditions."
"Hence, we keep our view that the Overnight Policy Rate (OPR) will be held steady at 2.75% through the year."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
The AI boom may follow the path of the 19th-century railway bubble, and builders may not be the ultimate winners
Goldman Sachs analyst Bobby Molavi compared the current situation to the 19th-century British railway mania: 500 companies spent more than the nation's annual income building 8,000 miles of railway, with most early investors losing out, while the real beneficiaries were the later "passengers." He pointed out that the current AI craze is driven by both debt and momentum, and that the S&P 500’s forward P/E ratio of 18x is only "a bit cheaper." Whether the builders can retain value is uncertain, and history does not offer an optimistic answer.
If Anthropic's IPO goes smoothly and the stock price rises next week, then everything remains the same for AI. Otherwise, some companies will go bankrupt.
The shrinking valuations of two major giants have triggered a chain reaction—investors are adopting more conservative revenue multiples for AI startups and are directly halting high-valuation financing for companies with zero revenue. Multiple venture capital firms have advised their portfolio companies to lower valuation expectations and to quickly build up cash reserves. Market participants warn that the outcome of Anthropic’s IPO will be a barometer for the industry: if successful, the boom will continue; if it fails, some companies may face elimination.
After the Brazilian election, political discount deepens; Morgan Stanley remains bullish on Petrobras (PBR.US), focusing on fuel pricing and dividends
Morgan Stanley still maintains its most optimistic "Overweight" rating, but has lowered its year-end 2027 target price from $31 to $25.
Corning (GLW.US) receives initial "Buy" rating from Jefferies! AI factories driving a fiber optic rush, with a potential global supply gap of up to 30%
For Corning, the recent profit growth mainly comes from the expansion of AI clusters. As the number of optical links crossing cabinets and campuses increases, customers need to deploy more optical fibers within limited conduit and cabinet space, thus driving demand for high-density optical cables and connection systems.
Crypto prices
More
