Apex Securities Sees Inflation At Two Pct Next Year

KUALA LUMPUR, Nov 24 (Bernama) -- Apex Securities Bhd has maintained its projection for inflation to rise modestly to two per cent in 2026, the upper end of the official forecast range of 1.3-2.0 per cent.

In a research note today, Apex Securities said downside bias to its 2026 forecast stemmed from policy measures, including the Sales and Services Tax (SST) expansion, Budi95 implementation, electricity and water tariff reforms, minimum wage adjustments and staggered medical insurance premium hikes.

“Inflation averaged +1.4 per cent year-on-year (y-o-y) in 10 months of this year, which is in line with our full-year forecast,” it said.

Apex Securities also said that spillover from the SST expansion has been muted so far, while the lower RON95 price under Budi95 and its expectation of a firmer ringgit versus the US dollar should provide additional offsets.

“Thus, we believe the risks to our 2026 inflation forecast of +2.0 per cent y-o-y are tilted slightly to the downside,” it said.

It also said that with growth holding steady and inflation contained, Bank Negara Malaysia (BNM) is expected to keep the Overnight Policy Rate unchanged at 2.75 per cent through 2026, barring renewed external trade shocks.

“That said, the benign inflation environment, the US Federal Reserve (Fed) easing bias, and an anticipated firmer ringgit provide policy room for BNM to ease the rate, should the growth outlook weaken amid a volatile external backdrop,” said Apex Securities.

Meanwhile, CIMB Investment Bank Bhd noted that ringgit sovereign bonds traded range-bound despite softer-than-expected headline inflation as core inflation ticked up to a two-year high.

“BNM announced the reopening of the 20-year Government Investment Issue (GII) 05/45 on Nov 20 with a smaller-than-expected RM3 billion issuance,” it added.

-- BERNAMA