In a statement, the research house said despite expectations of a deceleration in global growth next year, Malaysia’s gross domestic product is projected to continue its expansion, potentially growing by more than 4% year-on-year (y-o-y).

“With domestic inflation anticipated to remain comfortably below the 3% threshold on average, we foresee no inclination for rate cuts on Bank Negara Malaysia’s (BNM) agenda.

“Consequently, BNM is likely to uphold the status quo, maintaining the overnight policy rate at 3% throughout 2024,” it noted.

Nevertheless, the research house anticipated Malaysia’s headline inflation to maintain a 0.1%-0.2% month-on-month growth, driven by the potential resurgence of food prices amid the looming possibility of a stronger El Nino weather phenomenon in 2024.

“This, along with other external factors such as escalating geopolitical tensions, poses an additional risk of pushing prices higher.

“On the domestic front, the confluence of the government’s subsidy rationalisation plan, an increase in services tax, and the implementation of the progressive wage model are expected to heighten Malaysia’s inflationary pressures,” it said.

Last Friday, the statistics department said the country’s November headline inflation slowed to 1.5% y-o-y (Oct:1.8%), a 33-month low and below Kenanga Research and markets’ estimate of 1.7% due to lower-than-expected food prices.