Headline inflation surged to 4.7% yoy in Apr, in line with our forecast on base effects, higher commodity prices and the expiry of electricity tariff discounts. The trend divergence in 2021 between transitory headline inflation (+3.1%) and benign core inflation (+1.0%) to keep BNM’s policy stance cautious. We reiterate our end-2021 OPR forecast of 1.75% and expect policy rate hikes to commence in May next year, with an end-2022 forecast of 2.50%.
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