The Malaysian economy has managed to come through the Covid-19 pandemic in good shape, recording strong gross domestic product growth of 8.9% in the second quarter of 2022. However, its headline inflation rate is also ticking up, hitting a 14-month high of 4.4% in July 2022, driven by record food price inflation. In response, Bank Negara Malaysia has increased its benchmark interest rate for the third consecutive time, a move last seen in 2010.
On September 8, the central bank hiked the overnight policy rate 25 basis points to 2.5%, which brought the rate to its highest level since May 2020. The Malaysian banks have subsequently revised upwards their lending rates.
