This article first appeared in The Edge Malaysia Weekly on March 24, 2025 - March 30, 2025

Bank Negara Malaysia’s 2024 annual report release on Monday (March 24) will be watched for its guidance on the Malaysian economy and monetary policy stance, even though expectations are that the central bank is unlikely to diverge from the country’s official GDP growth forecast of between 4.5% and 5.5%. Economists largely expect 2025 GDP growth to come in below the 5.1% growth achieved in 2024, but still significantly above the 3.6% growth in 2023.

Of particular interest would be the central bank’s view on the inflation outlook in relation to possible tit-for-tat retaliatory tariffs sparked by US President Donald Trump’s administration, as well as those in relation to Putrajaya’s impending RON95 fuel blanket subsidy retargeting in mid-2025, plus a new list of taxable goods such as salmon and avocado under the expanded sales and services tax (SST) from May 1.

“Overall inflation is expected to remain manageable, amid the easing global cost conditions and the absence of excessive domestic demand pressures … Upside risk to inflation would be dependent on the extent of the spillover effects of domestic policy measures, as well as external developments surrounding global commodity prices, financial markets and trade policies,” Bank Negara said in its monetary policy statement on March 6. Headline inflation moderated to 1.5% in February from 1.7% in January.

Bank Negara will also release the fortnightly update of its international reserves position as at March 14, 2025, on Monday. At US$118.3 billion (RM529.37 billion) as at end-February 2025, reserves have in the first two months of the year recovered the US$2.1 billion lost in December 2024, and are enough to cover five months of imports of goods and services, and are 0.9 times short-term external debt.

Of greater interest would be the detailed disclosure of Bank Negara’s international reserves position as at end-February to be released on Friday (March 28), along with its monthly statistical bulletin, ahead of the Hari Raya Aidilfitri long weekend marking the end of Ramadan.

Bank Negara’s forward liabilities, which have been above one-fifth of total reserves since March 2024, have stayed above 25% of reserves for two straight months in December 2024 and January 2025, central bank data shows.

Asked about this, Winson Phoon, head of fixed income at Maybank Investment Banking Group in Singapore, says it is “not a concern at this juncture, given the availability of ample onshore US dollar liquidity to facilitate the rollovers. Foreign-exchange swaps are an important open market operation tool for Bank Negara in managing domestic liquidity conditions”.

Regionally, market watchers will also look to Indonesia’s and Thailand’s stock markets, following the recent sell-off by global funds as concerns mount over growth prospects. Global funds have reportedly pulled more than US$1 billion from Indonesia’s bond market. Trading in Indonesia would come ahead of a long holiday weekend marking the end of Ramadan (March 31 to April 4) as well as the Balinese Hindu New Year “Nyepi” on March 29.

In the commodities market, the spotlight is on gold, whose safe-haven appeal amid geopolitical and economic uncertainties drove it to a new all-time high of US$3,057.21 an ounce on March 20. Observers will also watch oil, with prices up last week after the US reportedly ramped up sanctions against Iranian crude.

Globally, news headlines might turn to China, with several prominent global CEOs expected to meet Chinese President Xi Jinping on the sidelines of the China Development Forum (CDF) on March 23 and 24 in Beijing. Some are also expected to attend the Boao Forum for Asia (referred to as “China’s Davos”) in Hainan province from March 25 to 28 as well as the HSBC Global Investment Summit in Hong Kong from March 25 to 27 featuring Chief Executive John Lee, former European Central Bank president Mario Draghi and Alibaba Group Holding Ltd chairman Joseph Tsai.

Eyes will also turn to South Korea, where the Constitutional Court has yet to announce a date for its ruling on President Yoon Suk Yeol’s impeachment, although it was filed earlier than Prime Minister Han Duck Soo, whose ruling will be delivered at 10am on Monday (March 24). Han, who says he is opposed to the martial law imposition, will be removed from office if the impeachment is upheld and will be reinstated if the motion is dismissed.

Over in North America, the US Congressional Budget Office is expected to announce on March 26 when it expects the US Treasury to reach its debt ceiling. Rate watchers are likely to be keeping an ear out to hear what several senior US Federal Reserve officials have to say at public forums during the week.

Last week, the US Federal Reserve, the Bank of England and the Bank of Japan held rates steady despite noting uncertainties from rising trade tensions from Trump’s intent to impose new reciprocal tariffs on April 2. Among major central banks, only Norway’s Norges Bank has a monetary policy decision this week on Thursday (March 27), with rates also seen likely to be kept unchanged at 4.5%.

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