Bank Negara Malaysia (BNM) raised its policy rate today by 25bp, as we had expected. Today’s move shows that the authorities see the local economic upswing as being sustainable and likely to stay strong, despite the increase in the external threats. This is the right approach to take. We expect one more 25bp hike in Q4 this year, and see rates peaking at 3.5% in mid-2011.
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