It seems like the BLR (Base Lending Rate) is likely to increase after Bank Negara Malaysia holds its monetary policy meeting to decide its overnight policy rate. The overnight policy rate indicates the overall monetary policy and acts as a target rate for the Central Bank’s day to day liquidity operations.

Several banks have already hinted at this by offering high fixed deposit rates. Increasing interest rates have always been used in the past to control inflation. So, do be prepared.

Now might be a good time to look into refinancing into a fixed interest rate!

Read the article by The Star after the jump.

KUALA LUMPUR: The Government expects the inflation rate to be 7% this month, due to the recent hike in fuel price and higher commodity prices, says Second Finance Minister Tan Sri Nor Mohamed Yakcop.

“We predict the inflation rate would be the same as last month at around 7% but it won’t exceed 5% for the year,” he said at Perwaja Holdings Bhd’s prospectus launch yesterday.

Nor Mohamed said although the figure might appear to be high on a month-on-month basis, this would be a “one-off inflation because fuel and food prices have gone up.”

He said the inflation was driven by cost-push rather than demand pressures, while capacity expansion and productivity increases would contribute towards containing the inflationary pressures.

On July 9, Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said the consumer price index in June was expected to exceed 6% because of adjustments to the petrol and diesel prices by 40.6% and 63.3% respectively.

The central bank will hold its monetary policy meeting on July 25, which will decide its overnight policy rate.

Nor Mohamed also said the country’s gross domestic product (GDP) was slated to grow 5% this year.

Despite a weaker external environment, he said the Malaysian economy was continuing to maintain its steady growth momentum. In the first quarter, the economy expanded by 7.1% driven by the robust domestic demand.

“For this year as a whole, given the sustained performance of our domestic economy as well as our strong economic fundamentals, we are confident that Malaysia will be able to achieve a respectable rate of GDP growth,” he said.

He added that the Government would continue to step up efforts to ensure the pass-through of global prices into domestic prices would be mitigated.

Later, when asked if the Government would impose a windfall tax on steel millers, similar to that of the independent power producers and plantation companies, he said there was no such plan.

He also said the Government did not have plans for a steel stockpile which was requested by the construction industry.