"Clearly, neither growth, nor inflation recommend further tightening this cycle," said Deutsche Bank economist Vaninder Singh and strategist Mallika Sachdeva, citing slowing global growth and domestic consumer sentiments having been hurt by tighter property measures, faltering financial markets late last year and declining wage growth.
Excluding telecomms and electricity, core inflation remains about 1.7 per cent. And though the job market eased in the fourth quarter, it remains tight, they added, noting that unit labour cost continues to accelerate.The official forecast is for core inflation of 1.5 to 2.5 per cent in 2019. In the MAS survey of professional forecasters, the median forecast is for core inflation of 1.7 per cent.
Maybank economists Chua Hak Bin and Lee Ju Ye see risks to core inflation staying on the downside, as the open electricity market broadens to more areas in March and May, further lowering utilities costs. After the February inflation figures, they cut their average core inflation forecast to 1.4 per cent for 2019 - and expect the MAS, too, to lower its forecast.
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