Friday: 7 May 2011

Malaysia Raises Interest Rates to 3% BLOOMBERG

Malaysia yesterday raised interest rates for the first time this year and asked banks to set aside more cash as reserves for a second time, joining India in stepping up the fight against inflation, amid surging oil and food prices worldwide.

Bank Negara Malaysia (BNM) increased its overnight policy rate to 3 per cent from 2.75 per cent. The statutory reserve requirement level will rise to 3 per cent from 2 per cent, effective on May 16.

BNM governor Zeti Akhtar Aziz, the first to raise rates in Asia last year as the region led a recovery from the global recession, is resuming rate hikes after pausing since July as inflation accelerated to a 23-month high.

India boosted borrowing costs this week for the ninth time since mid-March of last year as rising prices force nations to tighten monetary policy at the risk of slowing growth. The South-east Asian nation’s economy may expand 5 to 6 per cent this year, easing from a decade-high of 7.2 per cent last year, according to the central bank.