Zeti on need to address higher costs of food and fuel
KUALA LUMPUR: Malaysia needs to consider other measures apart from monetary policy to curb inflation, including increasing the supply and distribution of food, said Bank Negara governer Tan Sri Dr Zeti Akhtar Aziz.
Zeti acknowledged that the current inflation rate of 3.5% was considered quite high and that the higher costs of food and fuel were “very much felt now.”
“We really want to address this matter. It is important to increase the supply of food and improving the distribution of food items to lower the rate of inflation,” she told reporters yesterday after announcing the issuance of commemorative coins by Bank Negara to mark the new Third Series of the Malaysian coins.
Earlier reports said the country's inflation accelerated to the fastest pace in more than two years in June after power tariffs were raised.
A report by the Putrajaya-based Statistics Department last week said consumer prices rose 3.5% from a year earlier after climbing 3.3% in May.
Bank Negara was reported to have left the overnight policy rate at 3% on July 7, after raising the benchmark four times since early March 2010. In March, it said consumer prices might climb 2.5% to 3.5% this year from 1.7% in 2010.
In an interview in Jakarta on July 18, Zeti said that Bank Negara had normalised interest rates to the level where it was now, where it was still supportive of growth.
“At 3%, it still remains quite low and there is still strong credit demand and this means that it isn't an inhibiting factor to growth. We have to make that careful assessment because we also saw the first half of this year, growth had slowed,” she said in the interview.
She added that Bank Negara had to evaluate the conditions and going forward, the central bank did not want to have second-round effects that result in high inflation because that would erode purchasing power and that would contribute to lower growth.
Zeti said it was important to place priority on inflation because, unattended, it would result in damaging future growth prospects.
By EDY SARIF
edy@thestar.com.my
Zeti acknowledged that the current inflation rate of 3.5% was considered quite high and that the higher costs of food and fuel were “very much felt now.”
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| Third Series: Zeti with the new Bank Negara coins |
Earlier reports said the country's inflation accelerated to the fastest pace in more than two years in June after power tariffs were raised.
A report by the Putrajaya-based Statistics Department last week said consumer prices rose 3.5% from a year earlier after climbing 3.3% in May.
Bank Negara was reported to have left the overnight policy rate at 3% on July 7, after raising the benchmark four times since early March 2010. In March, it said consumer prices might climb 2.5% to 3.5% this year from 1.7% in 2010.
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| New commemorative coins launched by Bank Negara |
“At 3%, it still remains quite low and there is still strong credit demand and this means that it isn't an inhibiting factor to growth. We have to make that careful assessment because we also saw the first half of this year, growth had slowed,” she said in the interview.
She added that Bank Negara had to evaluate the conditions and going forward, the central bank did not want to have second-round effects that result in high inflation because that would erode purchasing power and that would contribute to lower growth.
Zeti said it was important to place priority on inflation because, unattended, it would result in damaging future growth prospects.
By EDY SARIF
edy@thestar.com.my
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