RHB IB Maintains 2026 Inflation Forecast At 1.8 Pct On Firmer Demand
KUALA LUMPUR, Feb 19 (Bernama) -- RHB Investment Bank Bhd (RHB IB) has maintained its 2026 inflation projection at 1.8 per cent (2025: 1.4 per cent), near the upper end of the official 1.3-2.0 per cent range, reflecting firmer domestic demand.
In its Economics View report, it said demand-driven pressures may increase as higher disposable incomes and consumption lift overall spending, while improved sentiment from easing tariff risks, robust economic prospects, and enhanced consumer support measures should further stimulate domestic activity.
“Nevertheless, inflation is expected to remain manageable and below the long-term average of 2.0 per cent, supported by orderly policy implementation and the absence of excessive demand pressures,” it said.
However, RHB IB said unexpected events, such as escalated geopolitical tensions or unexpected oil supply cuts from oil-producing nations, could create upward pressure on energy prices.
If inflation turns out to be higher and more volatile than expected, a rate hike cannot be completely ruled out, particularly against the backdrop of robust economic prospects, it said.
It noted that several factors are expected to continue driving inflation in the upcoming year, including demand-led inflationary pressure, changes in domestic policies, adjustments in RON95 prices and subsidy mechanism, impact from electricity tariff restructuring and fluctuations in global commodity prices.
Meanwhile, the investment bank also expects the overnight policy rate (OPR) to remain unchanged at 2.75 per cent in 2026.
It said the monetary policy is likely to remain data-dependent in upcoming Monetary Policy Committee (MPC) meetings, with decisions guided by economic growth prospects and underlying inflation dynamics.
“With stable macroeconomic conditions and manageable inflation, there is no immediate pressure for policy tightening. However, if the inflation turns out to be higher and more volatile than expected, a rate hike cannot be completely ruled out, particularly against the backdrop of robust economic prospects,” it said.
According to the Department of Statistics Malaysia (DOSM), Malaysia’s inflation increased 1.6 per cent in January 2026, with the index points rising to 135.7 from 133.6 in the same month last year.
Chief statistician Datuk Seri Dr Mohd Uzir Mahidin said this was driven by four groups, led by personal care, social protection and miscellaneous goods and services, which rose 6.6 per cent year-on-year compared with 5.7 per cent in December 2025.
Meanwhile, Kenanga Investment Bank Bhd said inflation should remain contained in 2026 even as growth holds up, while fiscal transfers and credit guarantees will support household demand but are unlikely to generate broad overheating.
It said targeted fuel and electricity subsidies continue to limit cost pass-through, while reforms have been gradual.
“The ringgit’s appreciation reinforces imported disinflation through lower fuel, food and intermediate goods prices. Upside risks stem from sales and services tax (SST) expansion, migrant levy adjustments and potential geopolitical disruptions.
“Still, in the absence of a commodity shock or wage spiral, inflation should remain below its long-term average,” it said.
The investment bank said policy is likely to stay steady, with growth easing and price pressures contained.
It added that Bank Negara Malaysia is likely to maintain the OPR at 2.75 per cent, preserving credibility and exchange-rate stability while retaining flexibility should external conditions deteriorate.
-- BERNAMA