BNM expected to keep rates on hold through 2015

Malaysia's July IP surprised to the upside and posted at 6.1%, even as activity remains resilient despite the weaker exchange rate and falling confidence. On a seasonally adjusted m/m basis, production fell by 0.1% m/m. Within IP, most of the stronger growth was driven by mining activity, which rose 14% y/y. 

Market conditions in Malaysia have been volatile and the MYR has remained under pressure, growth conditions and real activity have been resilient. 

"We recently upgraded our 2015 growth forecast to 5.0%. However, BNM was cautious in its recent policy statement on global growth, and we expect the central bank to keep rates on hold through 2015, and think it may only look to raise rates by mid-2016. We also do not think that BNM is likely to undertake any interest rate defence of the MYR", says Barclays in a report on Thursday.