Malaysia's inflation moderated to 1.9% in August

Will there be any rate cut?

According to Bank of America Merrill Lynch, Malaysia's headline inflation eased slightly, to +1.9% yoy in August vs. +2.0% in July. 

Here's more:

The pace of price increases eased in food (+3.6%), housing & utilities (+1.8%), and transport (+0.6%) components, while inflation in healthcare (+1.9%) and restaurants & hotels (+2.4%) edged higher.

On a month-on-month basis, consumer prices rose +0.1% in August (vs. +0.2% in July), led by housing & utilities (+0.4%), restaurants & hotels (+0.3%) and healthcare (+0.2%).

Weak ringgit & fuel price hike to impact CPI in coming months

The weak ringgit has not impacted headline inflation. Year-to-date, the ringgit has declined some 5.4% against the US dollar.

We expect sustained weakness in the MYR to feed into headline inflation in coming months. The +10% fuel price increase (to RM2.10 and RM2.00 for subsidized RON95 petrol and diesel) on 3 Sep may impact headline inflation by about +0.3 percentage points, by our estimates.

According to official forecasts, food prices may be impacted by +0.1%. Our average inflation forecast stands at +2.3% in 2013 and +2.7% in 2014.

Zeti sees no more measures to curb household debt 

BNM likely to leave OPR unchanged in November

We think BNM will likely leave the overnight policy rate unchanged, at 3%, at its November meeting (last policy meeting for the year).

Inflation remains low. A rate cut is unlikely, in our view, as BNM looks to discourage excessive household leverage.