RHB economists: Malaysia's upstream inflation is under control, the central bank is expected to keep interest rates unchanged throughout the year

(1) Recent data from Malaysia shows that producer prices in major industries have generally increased. RHB Senior Economist Chin Yee Sian pointed out that upstream cost pressures still need to be continuously monitored. (2) However, domestic policy support and stable demand conditions are expected to curb the transmission of external costs to consumer prices, and any impact on overall and core inflation may remain gradual and manageable. (3) She maintains her forecast for the overall inflation rate at 2.1% in 2026, with this outlook affected by global commodity prices, domestic policy adjustments, and upside risks to food inflation. (4) In terms of monetary policy, she expects Bank Negara Malaysia to keep the policy rate unchanged at 2.75% until the end of 2026, with subsequent decisions to continue depending on data on economic growth and inflation momentum.