00:00 Both headline and core inflation remained moderate in the first quarter of this year,
00:06 reflecting a stabilising demand and contained cost pressures.
00:11 Headline inflation increased slightly to 1.7%, fourth quarter last year it was at 1.6%, and
00:17 this mainly reflects the effects of adjustments to administered prices.
00:22 Particularly, this included the higher water tariffs and service tax on electricity bills
00:27 for high consumption uses.
00:30 Nonetheless, this was partly offset by the lower core inflation, which declined to 1.8%
00:37 during the quarter.
00:39 During the fourth quarter last year, it was at 2%, and this is largely driven by the continued
00:45 easing in the food and beverages segment.
00:49 In 2024, inflation is expected to remain moderate amidst stable cost and demand conditions.
00:56 And for the year as a whole, headline and core inflation are projected to average 2%
01:01 to 3.5% and 2% to 3% respectively.
01:06 Notably, the outlook remains dependent on the implementation of the massive policy on
01:12 subsidies and price controls, global commodity prices, and financial market developments.
01:20 And of note, the wider forecast range for headline inflation has incorporated some potential
01:25 impact from the implementation of fuel subsidy rationalisation.
01:32 On the downside, lower domestic inflation could potentially stem from the weaker than
01:37 expected global growth conditions.
01:40 This could manifest both in lower commodity prices as well as lower domestic demand conditions
01:46 following the weaker external demand.
01:48 The question in terms of EPF, if you know that introduction of the account tree is actually
02:12 to balance between the future needs in account one and then capital investment account two,
02:19 and account three is to really address the current rainy days needs.
02:25 So that's the purpose of it.
02:26 If you look at it, even the account one, the percentage has increased from 70% to 75%,
02:32 so that will encourage people to save more for their retirement.
02:35 Then we look in terms of the potential impact on inflation, we believe it's going to be
02:41 quite minimal.
02:43 And of course, this will definitely contribute to some kind of growth.
02:47 Let's keep the economy positive.
02:50 In terms of impact on inflation, there will be an impact, but the impact will be minimal
02:55 based on our predictions.
02:57 I just want to ask, would it be fair to say that as long as inflation remains within the
03:03 forecast range that you gave, you would remain comfortable with keeping the interest rate
03:07 at 3%?
03:09 Second, how likely do you see inflation misbehaving this year, should the government implement
03:16 the subsidy reforms for diesel and RON95?
03:19 Vanessa, on your question in terms of inflation between 2% to 3.5%, so that's our projection
03:25 for this year, and how does this relate to our monetary policy and OPR?
03:31 In terms of the considerations for the monetary policy, what we do is that we look at the
03:35 – based on the basic conditions at the point of time, and we look in terms of what would
03:40 be the outlook for both inflation and growth.
03:44 So that's where I think the monetary policy will remain in terms of the focus.
03:49 And this will be data-dependent, and it depends on every time the MPC meets, what will be
03:54 the changes that we see in terms of outlook for inflation and also growth.
03:59 So that's one of the monetary policy.
04:01 We believe that the current level of growth and inflation, and the current level of OPR
04:06 at 3%, is very supportive of the economy.
04:10 In terms of the impact on RON95 and diesel adjustments to inflation, I would say that
04:23 we have actually taken into account some of the impact.
04:26 That's why the range of the inflation to between 2% to 3.5% to take into consideration
04:30 some of the adjustments of diesel and also RON95.
04:36 And in terms of the assumption that we take is that we take the possible introduction
04:42 of this policy to be gradual and on a sequence approach, not a one-off approach.
04:48 That's the assumption that we take.
04:50 So that's where we came up with the 2% to 3.5%.
04:54 And of course, in terms of impact to growth, we can see from two perspectives, short-term
05:00 and also long-term.
05:01 Short-term, it may have some impact in terms of consumption and also investment, but this
05:08 could be mitigated by the cash transfer or income transfer that the government is thinking.
05:16 But the long-run impact is that this could be positive for the country, because it will
05:21 help in terms of the fiscal position.
05:24 And then it will also lead to household spending to be more fuel-efficient, which is very positive
05:29 for the country.
05:31 And this will also encourage corporates to actually invest in terms of energy-efficient
05:36 production, renewable and smart energy, which will again create high-value job opportunities.
05:41 So that's in terms of the impact that we see from the nation of the subsidy rationalisation.
05:46 I would like to ask about your opinions in terms of what the right timing for government
05:53 to implement these subsidies rationalisations.
05:57 And also, in terms of the US and Europe also discussing one-to-rate cuts in the second
06:05 half, what's your view of BNM?
06:07 Do you follow the pace?
06:11 Thank you.
06:12 In addition to the question on the EPF Account 3, as well as subsidy rationalisation, does
06:21 BNM expect any inflationary impact from the 13% salary hike for civil servants?
06:28 And in addition to the previous question on the subsidy reforms, does BNM have any indicators
06:36 or expectations of when these reforms will be implemented, as we're already approaching
06:42 the middle of the year?
06:44 I think looking at the current environment in terms of growth, I think we are experiencing
06:50 good growth numbers between 45% and with the moderating trend in inflation, we believe
06:56 this provides a very good window of opportunity for us to undertake the subsidy rationalisation
07:02 and many reform measures.
07:03 Second, in terms of the rate cuts by the US and Europe, whether we follow the pace in
07:11 terms of the rate cuts.
07:15 In terms of our multiple policy considerations, we look at the domestic perspective in terms
07:20 of what will be the impact, what will be the outlook for growth and profitability over
07:27 the next couple of months moving forward.
07:31 What we'll do is that we only take in terms of what happens globally, for example the
07:36 rate cuts in the US and Europe, we take that in so far as how this will have an impact
07:42 in terms of our growth outlook and our inflation outlook for Malaysia.
07:47 So that's how we look at it.
07:48 But that doesn't mean that we'll follow the steps that have been taken by any particular
07:52 country.
07:53 So that's how we look at it from a policy perspective.
07:58 Daniel, your question in terms of the salary of the civil servant.
08:03 Of course the salary adjustment will support the consumption, but this salary adjustment
08:08 will only happen in December.
08:10 So for this year, that should not affect very much in terms of the inflationary pressure
08:16 or inflation project that we have.
08:19 But it may come in for next year.
08:21 But based on our past experience, we have seen that adjustments in salary does not have
08:28 a huge impact on inflation.
08:31 So it will be within the expectation.
08:35 In terms of when the rationalisation will be implemented, I think let's wait for the
08:42 government to make the relevant announcement on this.
08:46 And there are a lot of matters that need to be looked at because these are very important
08:50 decisions, not only in terms of how do you do it, in terms of the magnitude and the sequencing,
08:57 more importantly how do you ensure that there's a fair and equitable income transfer to the
09:04 targeted segments of society.
09:06 So that's where I think the complexity of it.
09:08 So perhaps I think let's wait for the government to announce it.
09:10 What are your thoughts on whether the CPI is still representative of the actual inflation
09:16 in the country?
09:17 That question in terms of from Daniel, in regards to whether the CPI is representative,
09:21 it is certainly representative because it's based on the basket of goods that is commonly
09:26 being used by the society, by the rakyat.
09:29 But of course, as I said earlier on, there are in terms of differences of perception
09:35 in regards to what do they see as inflation expectations of the public.
09:42 That is different.
09:43 But in terms of the numbers itself, CPI does capture in terms of the growth of the prices
09:49 in Malaysia.
09:51 Okay.
09:52 Thank you.
09:53 Thank you.
09:54 Thank you.
09:55 Thank you.
09:56 [BLANK_AUDIO]
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