BusinessTimes
BANK Negara Malaysia governor Tan Sri Dr Zeti Akhtar Aziz says soaring food and energy prices may hurt household spending and damp economic growth, slowing expansion this year to below its March forecast.
"The important consideration in this scenario is to sustain domestic demand," Zeti said in an interview yesterday in Basel, Switzerland.
The economy may grow between 4.5 per cent and five per cent this year, she said, citing "preliminary" estimates. The central bank had forecast in March expansion of 5-6 per cent.
Slowing growth may make it harder for Malaysia to follow Vietnam, Indonesia and the Philippines in raising borrowing costs this year to tame inflation even as oil doubled to a record US$142.99 (RM468) a barrel last Friday and rice and wheat reached unprecedented levels.
"Bank Negara Malaysia does not want to be trigger-happy cowboys shooting straight from the hip at the very first sign of danger," said Suhaimi Ilias, an economist at Aseambankers Malaysia Bhd, who expects the central bank to hold rates steady until the year-end.
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