This was after the US’ central bank announced its biggest interest rate increase in more than two decades to fight inflation. The US Federal Reserve (Fed) on Wednesday raised its benchmark interest rate by 0.5 percentage points to a target rate range of between 0.75% and 1%. “It is well known that high household indebtedness may be destabilising to the economy in the event of an interest rate shock. Inflation risks seen to increaseMeanwhile, Goh noted that Malaysia’s inflation risks are still tilted to the upside, going by a recovering economy, prolonged supply chain bottlenecks, elevated commodity prices, and a higher national minimum wage. He also noted there is the risk that a low interest rate environment will cause domestic demand to strengthen too quickly and overshoot.

Source: The Edge Markets May 06, 2022 06:17 UTC