Inflation to taper off in 2H09, says Zeti

Inflation to taper off in 2H09, says Zeti

17-06-2008
by Jose Barrock, Joyce Goh & Yong Min Wei

Kuala Lumpur: Inflation is likely to taper off in the second half of 2009, which would mean that there is no real need to change monetary policies, Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz told the press at the sidelines of the World Economic Forum yesterday.

However, it was also important to anchor expectations that could fuel further price increases, which the government was trying to contain, she said.

The growth forecast was likely to be about 5%, at the lower end of previous expectations, which were hinged between 5% and 6%. This lower growth forecast is attributable to lower consumption, Zeti said.

“But we also need to see (the developments). We have about 30 indicators that are measured and monitored to see how they affect consumption and investment activity and borrowing from the financial system,” she said.

Following a substantial hike in the prices of petrol (up 78 sen or 41%) and diesel (RM1 or 63%) and higher energy prices, the central bank had forecast that inflation would hit 4.2% this year, up from previous estimates of between 2.5% and 3%.

She said that initiatives by the government such as stimulus packages might also have to be taken into account, as these helped promote growth.

“The government has been announcing (stimulus packages) from time to time, there will be announcements for small businesses, for consumers and for large businesses and so on,” Zeti added.

At this point in time, she said, Bank Negara was focusing on both cutting inflation and stimulating growth and was looking at the adjustments made by the federal government to such items as energy prices, which will have important implications on both policy and economic performance.

The central bank would make announcements after compiling the necessary information in July this year.

“We have to take into account that there may be some moderation in growth,” she said.

“We also have to monitor to what extent higher costs will be passed on to consumers and whether any wage increases are not commensurate with the increase in productivity.”

Zeti said that the country had ample liquidity and had been performing well despite the turmoil going on in other parts of the world.

Zeti to step down from Khazanah

17-06-2008

Kuala Lumpur: Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz has tendered her resignation as a director of Khazanah Nasional Bhd.

“They (Khazanah) have investments in banks and financial institutions, so it does not seem proper for the governor (of the central bank) to be involved with them,” she told reporters on the sidelines of the World Economic Forum yesterday.

Khazanah is the largest shareholder in Bumiputra Commerce Holdings Bhd (BCHB), with 23% equity interest, and also holds a 30% stake in Islamic banking outfit Bank Muamalat Bhd.

In Indonesia, Khazanah is merging its PT Bank Lippo Tbk with BCHB’s PT Bank Niaga Tbk.

Zeti said she gave her resignation letter in April but the board of Khazanah had yet to meet to deliberate on the matter. The board of the government’s investment arm is slated to meet in July to discuss the matter.

Zeti was appointed as a director of Khazanah in July 2000 after she became the Bank Negara governor in May.