Malaysia: Inflation turns negative – ANZ

Inflation turned negative in March (-0.2% y/y) on the back of a sharp fall in transport costs, a fallout of the recent massive drop in global oil prices, per ANZ Bank. USD/MYR is trading at 4.385.

Key quotes

“On a sequential basis, headline inflation decreased 1.2% m/m in March on the back of an 8.7% m/m decline in the ‘Transport’ component. ‘Food’ prices also declined by 0.1% m/m.” 

“On an annual basis, inflation eased to -0.2% y/y in March from 1.3% previously.” 

“Core inflation remained unchanged at 1.3% y/y in March.” 

“We expect Bank Negara Malaysia (BNM) to cut by 25bps, bringing the Overnight Policy Rate (OPR) to 2.25%.”