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d) Kuala Lumpur. '1 November 201+, Elim cutting fuel subsidies that threaten private consumption and cause inationary pressures, Malaysia still manages to keep its benchmark
d) Kuala Lumpur. '1" November 201+, Elim cutting fuel subsidies that threaten private consumption and cause inationary pressures, Malaysia still manages to keep its benchmark interest rate steady to support growth. Bank Negara Malaysia held overnight policy rate is at 3.25%.. The central bank governor, Tan Sri MAkhtar Azis, say monetary policy mitt: remain accommodative to support expansion due to uncertainties of global recovery. Last quarter demand for Southeast Asian nation's export weakened and rising costs are hurling companies and consumers. Ho M Chen. an economist at the United Overseas Bank Ltd. In Singapore said the impact of the fuel price hike is going to affect consumption. Thus, they will not be a rush to raise interest rates further. Gross domestic product growth is forecasted as much as 6% this year and next by the government The central bank said that while domestic demand smmaiu the key driver of growth. private consumption and export have shown signs of moderation. However. investment activity is projected to remain robust Hence. the Monetary Policy Committee will continue to assess the balance ofr'islrs surrounding the outlook for domestic growth and ination carefully. In September, Malaysia's inflation rate was 2.6% compared to 3.3% in August The Government consumer prices to climb from 4% to 5% next year, the fastest since ZDDB. In October. the government raised fuel prices by about 10% and will increase some gas tariffs this month. Moreover. with a goods and services tax of 6% that will start in April next year, it will increase the burden on businesses and households after food and fuel subsidy cuts. Source; Adapted from The Star airline, 2014- State the two different types of inationh [2 Marks] What is monetary policy? Should the central bank implement expansionary or contractionary monetary policy to control inflation?" ['1- marks] Based on the article. state the instrument used by the central bank of Malaysia to control ination. Suggest other two instruments ofmonetary policy that can be used to reduce inflation. [2 Marks] What are the two factors that can lower Malaysia economic growth in the above article? ['1- marks] Briey explain the two types of direct control that can be used to solve ination
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