This means that another 125bps of interest rate hikes are in the offing. Powell went on to say that the final target is to bring inflation down to 2%, from August 2022’s 8.3% year on year. Malaysia started the period already at high interest rate levels and kept them high throughout the period, with a peak of 12.4% in 1982. Despite the higher interest rate posture by Malaysia, the ringgit actually fell against the USD in the period from 1980 to 1987 (see Chart 4). Due to Malaysia pegging the ringgit to the USD in 1998, our economy is pro-cyclical with the US’ as Chart 5 shows.
